Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-4_03-ap-04837/USCOURTS-canb-4_03-ap-04837-1/pdf.json

Parties Involved:
Ralbert Rallington Brooks-Hamilton
Plaintiff
City of Oakland
Defendant

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UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

In re No. 03-44829 TT 

Chapter 7

RALBERT RALLINGTON 

BROOKS-HAMILTON,

Debtor.

____________________________/

RALBERT RALLINGTON A.P. No. 03-4837 AT

BROOKS-HAMILTON,

Plaintiff,

vs.

CITY OF OAKLAND,

Defendant.

______________________________/

MEMORANDUM OF DECISION ON REMAND RE SANCTIONS

On September 1, 2004, an order was entered granting in part and

denying in part the motion filed by defendant (the “City”) for

sanctions pursuant to Rule 9011(b) of the Federal Rules of Bankruptcy

Procedure. In the order, the Court imposed sanctions against the

debtor’s counsel, David A. Smyth (“Smyth”), for filing claims that

Signed: August 29, 2008

________________________________________

LESLIE TCHAIKOVSKY

U.S. Bankruptcy Judge

________________________________________

Entered on Docket 

September 02, 2008

GLORIA L. FRANKLIN, CLERK 

U.S BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 03-04837 Doc# 49 Filed: 08/29/08 Entered: 09/02/08 17:23:31 Page 1 of 6 
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were both frivolous and asserted for an improper purpose. The Court

awarded the City monetary sanctions in the amount of $10,671.

The order was affirmed by the Bankruptcy Appellate Panel. On

further appeal, the Ninth Circuit Court of Appeals reversed the

Court’s order in part, finding that only one of the three legal

claims was frivolous. It remanded, directing the Court to

reconsider, given this ruling, the amount of the monetary sanction as

well as whether the Court still believed the one frivolous claim had

been asserted for an improper purpose. For the reasons stated below,

the Court concludes that the one frivolous claim was asserted for an

improper purpose but that the monetary sanction should be reduced to

$2,134.20. The reasons for the Court’s ruling on remand is set forth

below.

As noted above, the Court’s award of sanctions was based on its

conclusion that three of the claims asserted by Smyth in the abovecaptioned adversary proceeding were frivolous. The three claims and

the rulings made concerning them are summarized below. 

1. First, Smyth contended that the liens asserted on the

debtor’s property were illegal because they violated federal

Department of Housing and Urban Development (“HUD”) rules (the

“Statutory Claim”). The Court concluded that Smyth’s assertion of

this claim was frivolous because the relitigation of this claim was

barred by issue preclusion. A federal district court had dismissed

this claim in an earlier action for lack of subject matter

jurisdiction, finding that there was no private right of action

created by a violation of HUD rules. 

Case: 03-04837 Doc# 49 Filed: 08/29/08 Entered: 09/02/08 17:23:31 Page 2 of 6 
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On appeal, the Ninth Circuit held that this was error. It ruled

that the Statutory Claim was not barred based on issue preclusion

because, in dismissing the claim, the district court never reached

the question of whether a violation of HUD rules could be asserted as

an affirmative defense to enforcement of the City’s liens. 

2. Smyth also contended that the City had breached its contract

with the debtor by failing to disburse all the loan money promised.

The Court concluded that Smyth’s assertion of this claim was

frivolous because the relitigation of the claim was barred by claim

preclusion. A state court had sustained a demurrer without leave to

amend to a Second Amended Cross-Complaint to the City’s complaint,

asserting the same claim for relief. 

On appeal, the Ninth Circuit held that this ruling was also

erroneous. It noted that, in the state court action, the City had

demurred on two grounds: (1) statute of limitations and (2) failure

to state a claim. While the order granting the demurrer stated that

it was based on failure to state a claim, under California law, a

general demurrer for failure to state a claim may also be based on

the claim being barred by statute of limitations grounds. Under

California law, a dismissal on limitations grounds does not give rise

to claim preclusion. The Ninth Circuit held that it was impossible

to determine from the state court’s order whether the demurrer was

based on the lack of substance of the allegations or the limitations

grounds.

3. Finally, Smyth contended that the City had violated the one

action rule, thereby waiving its liens, by obtaining a writ of

Case: 03-04837 Doc# 49 Filed: 08/29/08 Entered: 09/02/08 17:23:31 Page 3 of 6 
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possession with regard to its personal property collateral. See Cal.

Civ. Proc. Code § 726(a). The Court concluded that this claim was

frivolous for two reasons. First, the law is clear that a secured

creditor does not violate the one action rule by enforcing a writ of

possession enabling it to take possession of its collateral. Second,

even if the writ obtained by the City had been a writ of attachment,

based on its underlying unsecured claim, a secured creditor does not

violate the one action rule by simply obtaining such a writ. The

rule is only violated by enforcing the writ. The Ninth Circuit

affirmed this ruling, agreeing with the Court that Smyth’s assertion

of this claim was frivolous.

On remand, the Court concludes once again that, based on an

objective standard, the assertion of the one action claim based on

the undisputed facts underlying this proceeding was for an improper

purpose. As the Ninth Circuit pointed out, as early as 1900, the

Supreme Court of California rejected Smyth’s argument that a secured

creditor violated the one action rule by seeking a writ of possession

of its personal property collateral. Moreover, Smyth did not even

allege that the City had ever attempted to enforce the writ. 

 However, given the more limited basis for the Court’s sanction

ruling, the amount of the monetary sanction should clearly be

reduced. In attempting to determine the appropriate amount of the

reduction, the Court has reviewed the City’s motion to dismiss and

its reply brief, including the time entries made in support of the

monetary sanction request. The Court is unable to determine from the

time entries how much time was spent on the one action claim as

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opposed to the two claims the assertion of which the Ninth Circuit

has determined was not frivolous. Instead, the Court bases its award

on the portion of the legal argument devoted to the one action claim:

i.e., approximately twenty percent of the total. As a result, the

monetary sanction will be reduced to twenty percent of the original

award: i.e., to $2,134.20. The order directing payment of this

monetary sanction will be effective as soon as it is final. 

CONCLUSION

For the reasons stated above, the Court holds that the one

action claim was a frivolous claim which was also asserted by Smyth

for an improper purpose. For that reason, the City’s motion for

monetary sanctions should be granted. However, the amount of the

award should be reduced to $2,134.20, representing the portion of the

fees incurred by the City attributable to the frivolous claim.

Counsel for the City is directed to submit a form of order in

accordance with this decision. 

END OF DOCUMENT

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COURT SERVICE LIST

David Ashley Smyth

Smyth Law Offices

1990 N California Blvd. #830

Walnut Creek, CA 94596 

Chris Kuhner

Kornfield, Paul & Nyberg

1999 Harrison St., #2675

Oakland, CA 94612

Case: 03-04837 Doc# 49 Filed: 08/29/08 Entered: 09/02/08 17:23:31 Page 6 of 6