FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In the Matter of: PATRICIA ANN 

LEHTINEN,

Debtor,

No. 05-17421

JIM G. PRICE

BAP No. Appellant,  NC-04-01534-BMaS

v.

OPINION

PATRICIA ANN LEHTINEN; MARTHA

BRONITSKY, Chapter 13 Standing

Trustee; UNITED STATES TRUSTEE,

Appellees. 

Appeal from the Ninth Circuit

Bankruptcy Appellate Panel

Brandt, Marlar, and Smith, Bankruptcy Judges, Presiding

Submitted February 12, 2009*

San Francisco, California

Filed April 28, 2009

Before: Dorothy W. Nelson, William A. Fletcher and

Richard C. Tallman, Circuit Judges.

Opinion by Judge D.W. Nelson

*The panel unanimously finds this case suitable for decision without

oral argument. See Fed. R. App. P. 34(a)(2). 

4975
COUNSEL

Jim Price, Brentwood, California, for the appellant.

OPINION

D.W. NELSON, Circuit Judge:

Appellant Jim Price appeals the Bankruptcy Appellate

Panel’s (“BAP”) decision affirming the bankruptcy court’s

order suspending him. We affirm. 

FACTUAL AND PROCEDURAL BACKGROUND

In October or November 2003, debtor Patricia Lehtinen

(“debtor”) retained Jim Price to represent her in a chapter 13

4978 IN THE MATTER OF LEHTINEN
proceeding. Debtor was primarily concerned with selling her

house to repay certain debts. 

Debtor’s petition was filed before the U.S. Bankruptcy

Court, Northern District of California. On February 19, 2004,

debtor attended the 11 U.S.C. § 341 meeting of the creditors.

Price did not attend this meeting and sent a contract attorney

instead. Debtor alleges that Price failed to inform her that he

would not attend. 

Price also referred debtor to Rene Boisvert of Boulevard

Equity Group so that debtor could obtain a loan to fix up her

house. Boisvert told debtor that Boulevard would lend her the

funds and pay off the first deed of trust on her house, and that

Boulevard would be repaid from the proceeds of the sale, but

only if debtor retained Price as a broker for the sale. Debtor

never completed the loan documents, and sold her house

through another realtor without informing Price. 

The trustee served notice of a June 3, 2004, confirmation

hearing on Price and debtor. Debtor called the trustee’s office

in April 2004, and was advised that she had until the confirmation hearing to either sell her home, refinance her home, or

amend her plan. She was also advised that she was required

to attend the hearing. According to debtor, this was the first

time she had heard of the confirmation hearing because Price

had failed to notify her. 

Price did not appear at the June 3, 2004, confirmation hearing. At the request of another client, he had agreed to appear

in another court even though he knew it conflicted with the

confirmation hearing. He did not request a continuance of

either hearing. Debtor attended the confirmation hearing

alone, and informed the court that her house was pending sale.

The court confirmed the plan with a 100% payout to unsecured creditors. 

Without checking the outcome of the confirmation hearing,

Price sent a letter to debtor on June 4, 2004, stating that her

IN THE MATTER OF LEHTINEN 4979
case had been dismissed, that he could refile another case for

her or help her to sell the house, and that the bank could proceed with the foreclosure on her house. Price admits that

sending the letter was a “mistake.” He assumed the case had

been dismissed because he missed the hearing and because

debtor was behind on her payments to the trustee. Price testified that he sent the letter “to urge . . . [debtor] to do something.” 

On June 10, 2004, the bankruptcy court issued an order to

show cause why Price should not disgorge all or part of his

$1,500 fee for failure to appear at the meeting of the creditors

and the confirmation hearing (hereinafter “First OSC”). On

July 7, 2004, the bankruptcy court held a hearing on these

issues. On July 8, 2004, it entered an order resolving both

absences by ordering Price to disgorge $300 of the $1,500 fee.

After the hearing, but before the issuance of the order,

debtor sent a letter to the bankruptcy court stating: (1) that

Price never informed her of the confirmation hearing date; (2)

that she learned of the hearing date from the trustee; (3) that

Price was a real estate broker and pressured debtor to list her

house with his brokerage firm; and (4) that Price referred

debtor to his friend for a home improvement loan, who had

conditioned the loan on her engaging Price as her broker.

Debtor also attached the June 4, 2004, letter from Price. 

Based on debtor’s letter, the bankruptcy court issued a second order to show cause “why . . . [Price] should not be sanctioned pursuant to this court’s inherent sanction power . . . for

bad faith conduct,” and “why he should not be suspended or

disbarred from practice in this court” (hereinafter “Second

OSC”). The Second OSC identified four instances of alleged

misconduct: (1) Price’s failure to attend and to inform debtor

of her confirmation hearing; (2) the pressuring of debtor to list

her house for sale with his brokerage firm; (3) the lender’s

condition of retaining Price as the broker for the loan transaction; and (4) his letter to debtor falsely informing her that her

4980 IN THE MATTER OF LEHTINEN
bankruptcy case had been dismissed and that a foreclosure

sale was imminent. The Second OSC also stated that “the

facts point to a clear conflict of interest between Mr. Price

acting as the debtor’s lawyer, soliciting the debtor to use his

services as a real estate broker, and serving as a loan broker.”

Moreover, it described the evidence required regarding the

sanctionable conduct. The Second OSC, however, did not

identify applicable rules or sections. 

The bankruptcy court held the Second OSC hearing on July

26, 2004. On October 22, 2004, it ordered Price to disgorge

the balance of the $1,500 fee and suspended him from practicing before the bankruptcy court of the Northern District of

California for three months. It concluded that Price violated

several parts of the California Rules of Professional Conduct

and the California Business & Professions Code. 

On October 29, 2004, Price filed an appeal and obtained a

stay of the suspension with the BAP. On October 11, 2005,

the BAP concluded that the bankruptcy court “was within its

authority in sanctioning Price, and afforded him due process,”

but vacated the suspension and remanded to the bankruptcy

court for consideration of the American Bar Association Standards in disciplining Price. Price v. Lehtinen (In re Lehtinen),

332 B.R. 404, 417 (9th Cir. B.A.P. 2005). 

On November 10, 2005, Price appealed to this court. No

answering brief was filed. 

JURISDICTION

[1] We have jurisdiction over “final decisions” of the BAP

under 28 U.S.C. § 158(d). Although there is some question as

to the finality of the BAP’s decision because the BAP vacated

the portion of the bankruptcy court’s order suspending Price

and remanded for further proceedings, see Foothill Capital

Corp. v. Clare’s Food Mkt., Inc. (In re Coupon Clearing

Serv., Inc.), 113 F.3d 1091, 1098 (9th Cir. 1997), we have

IN THE MATTER OF LEHTINEN 4981
jurisdiction over a non-final order in a bankruptcy case where

“the appeal concerns primarily a question of law,” DeMarah

v. United States (In re DeMarah), 62 F.3d 1248, 1250 (9th

Cir. 1995); accord Bonner Mall P’ship v. U.S. Bancorp Mortgage Co. (In re Bonner Mall P’ship), 2 F.3d 899, 904 (9th

Cir. 1993), cert. granted, 510 U.S. 1039 (1994), dismissed as

moot, 513 U.S. 18, 29 (1994). This case concerns the bankruptcy court’s power to sanction. Because this is a purely

legal question, we have jurisdiction. See Knupfer v. Lindblade

(In re Dyer), 322 F.3d 1178, 1187 (9th Cir. 2003). 

[2] Although Price argues that the proceeding is non-core,

the acts and events upon which his suspension was predicated

occurred in the course of his representation of debtor in matters central to the administration of her case. As such, the

disciplinary hearing fits well within the ambit of a core proceeding. 28 U.S.C. § 157(b)(2)(A).1

STANDARD OF REVIEW

“This court independently reviews the bankruptcy court’s

rulings on appeal from the BAP.” Miller v. Cardinale (In re

DeVille), 361 F.3d 539, 547 (9th Cir. 2004). “This court

reviews an award of sanctions for an abuse of discretion.” Id.

Due process challenges are reviewed de novo. Willamette

Waterfront, Ltd. v. Victoria Station Inc. (In re Victoria Station

Inc.), 875 F.2d 1380, 1382 (9th Cir. 1989). A court’s interpretation and application of a local rule is reviewed for abuse of

discretion. United States v. Heller, 551 F.3d 1108, 1111 (9th

Cir. 2009). 

1Price relies on Sheridan v. Michels (In re Sheridan), 362 F.3d 96 (1st

Cir. 2004), but that case is distinguishable because the bankruptcy court

there held an omnibus disciplinary hearing (concerning several of the

attorney’s unrelated cases, many of which were closed), and the First Circuit found that such a proceeding was non-core, id. at 107-08. The circumstances here are clearly different. 

4982 IN THE MATTER OF LEHTINEN
DISCUSSION

Price argues the BAP’s decision should be reversed

because: (1) the bankruptcy court lacked the power to suspend

him; (2) he was not accorded due process; and (3) the bankruptcy court abused its discretion by failing to follow N.D.

Cal. Civ. R. 11-6. We address each argument in turn. 

I. The Bankruptcy Court’s Inherent Power to Suspend

Attorneys

[3] Bankruptcy courts generally have the power to sanction

attorneys pursuant to (1) their civil contempt authority under

11 U.S.C. § 105(a); and (2) their inherent sanction authority.

Dyer, 322 F.3d at 1192-93, 1196. The bankruptcy court sanctioned Price under its “inherent sanction powers.” 

[4] In Chambers v. NASCO, Inc., the Supreme Court held

that the inherent power of a federal court permits it, inter alia,

“to control admission to its bar and to discipline attorneys

who appear before it.” 501 U.S. 32, 43 (1991). In Caldwell v.

Unified Capital Corp. (In re Rainbow Magazine, Inc.), this

court held that bankruptcy courts also “have the inherent

power to sanction that Chambers recognized exists within

Article III courts.” 77 F.3d 278, 284 (9th Cir. 1996). Although

a simple reading of both Chambers and Caldwell suggests

that the bankruptcy court has the power to suspend attorneys,

this court’s subsequent cases have limited the scope of the

bankruptcy court’s inherent power, see, e.g., Dyer, 322 F.3d

at 1197, warranting further analysis. 

A bankruptcy court’s inherent power allows it to sanction

“bad faith” or “willful misconduct,” even in the absence of

express statutory authority to do so. Id. at 1196. It also “allows a bankruptcy court to deter and provide compensation

for a broad range of improper litigation tactics.” Id. (citing

Fink v. Gomez, 239 F.3d 989, 992-93 (9th Cir. 2001)). 

IN THE MATTER OF LEHTINEN 4983
The inherent sanction authority differs from the statutory

civil contempt authority in at least two ways. First, with the

inherent power, a bankruptcy court may sanction a “broad

range” of conduct, unlike the “[c]ivil contempt authority[,

which only] allows a court to remedy a violation of a specific

order (including ‘automatic’ orders, such as the automatic

stay or discharge injunction).” Id. Second, unlike the civil

contempt authority, “[b]efore imposing sanctions under its

inherent sanctioning authority, a court must make an explicit

finding of bad faith or willful misconduct.” Id. (citing Fink,

239 F.3d at 992-93). “[B]ad faith or willful misconduct consists of something more egregious than mere negligence or

recklessness.” Id. (citing Fink, 239 F.3d at 993-94). 

“Because of their very potency, inherent powers must be

exercised with restraint and discretion.” Chambers, 501 U.S.

at 44. Thus, like the bankruptcy court’s civil contempt authority, the inherent sanction authority “does not authorize significant punitive damages.” Dyer, 322 F.3d at 1197 (noting that

this court has “refrained from authorizing a punitive damage

award under the bankruptcy court’s inherent sanction authority”). Punitive sanctions are prohibited, at least in part, because

the bankruptcy court cannot provide the due process protections that a criminal defendant is ordinarily entitled to, such

as a right to a jury trial. Id. at 1194; cf. F.J. Hanshaw Enters.,

Inc. v. Emerald River Dev., Inc., 244 F.3d 1128, 1139 (9th

Cir. 2001) (“[W]hen a court uses its inherent powers to

impose sanctions that are criminal in nature, it must provide

the same due process protections that would be available in a

criminal contempt proceeding.”). 

[5] The BAP has held that the bankruptcy court has the

power to disbar or suspend an attorney under its inherent

authority power. Peugeot v. U.S. Trustee (In re Crayton), 192

B.R. 970, 976 (9th Cir. B.A.P. 1996). However, it is a question of first impression in this court whether the bankruptcy

court has this power. 

4984 IN THE MATTER OF LEHTINEN
A. Characteristics of civil and punitive sanctions

“Civil penalties must either be compensatory or designed to

coerce compliance.” Dyer, 322 F.3d at 1192 (citing Hanshaw,

244 F.3d at 1137-38). Although this court has never “develop[ed] . . . a precise definition of the term ‘serious’ punitive (criminal) sanctions,” id. at 1193, it has stated that a

penalty is criminal in nature “if the contemnor has no subsequent opportunity to reduce or avoid the fine through compliance, and the fine is not compensatory,” id. at 1192 (internal

quotations omitted). It is also criminal if the sanction was

intended “to vindicate the authority of the court.” Hanshaw,

244 F.2d at 1138 (internal quotations omitted). 

In the bankruptcy context, this court has found that a “sanctions award” between $50,000 and $200,000 that “was neither

intended to coerce compliance nor intended to compensate . . .

for actual damages” was a criminal contempt sanction. Dyer,

322 F.3d at 1192. Even “a flat unconditional fine totaling

even as little as $50 could be criminal if the contemnor has

no subsequent opportunity to reduce or avoid the fine through

compliance.” Id. (internal quotation marks omitted). 

B. Price’s Suspension 

[6] Price argues that his suspension was punitive in nature

and therefore akin to criminal contempt. His suspension did

not compensate debtor for losses sustained. See Dyer, 322

F.3d at 1192. Nor was Price able to reduce or avoid the sanction through compliance. See id. Instead, it appears that the

suspension’s purpose was to punish Price for his “egregious”

conduct. 

[7] In other contexts, however, this court has held that a

lawyer disciplinary proceeding is not a criminal proceeding.

Attorney suspension is “neither civil nor criminal, but an

investigation in to the conduct of the lawyer-respondent.”

Canatella v. California, 404 F.3d 1106, 1110 (9th Cir. 2005)

IN THE MATTER OF LEHTINEN 4985
(internal quotation marks omitted). “[D]isbarment proceedings are not for the purpose of punishment but to maintain the

integrity of the courts and the profession.” Patterson v. Standing Comm. of Discipline to Bar of the U.S. Dist. Court of Or.

(In re Patterson), 176 F.2d 966, 968 n.1 (9th Cir. 1949). 

II. Due Process 

[8] A “lawyer subject to discipline is entitled to procedural

due process, including notice and an opportunity to be heard.”

2

 Rosenthal v. Justices of the Supreme Court of Cal., 910 F.2d

561, 564 (9th Cir. 1990) (citing In re Ruffalo, 390 U.S. 544,

550 (1968)); Crayton, 192 B.R. at 978. A suspension hearing

is not a criminal proceeding so the “normal protections

afforded a criminal defendant do not apply.” Rosenthal, 910

F.2d at 564; see also Ex Parte Wall, 107 U.S. 265, 288-89

(1883) (holding that no jury trial right attaches in an attorney

disciplinary proceeding). 

A. Notice

[9] “Ordinarily a court proposing to impose sanctions notifies the person charged both of the particular alleged misconduct and of the particular disciplinary authority under which

the court is planning to proceed.” DeVille, 361 F.3d at 548.

The rule, however, is not absolute. Id. This court has held that

when using the inherent sanction power, due process is

accorded as long as the sanctionee is “provided with sufficient, advance notice of exactly which conduct was alleged to

2Under California law, an attorney facing disbarment or suspension is

also entitled to present witnesses. See Rosenthal, 910 F.2d at 564. These

protections go beyond what is required under federal constitutional law.

See id.; United States v. Engstrom, 16 F.3d 1006, 1012 (9th Cir. 1994)

(“Procedural due process does not encompass the right to present all

desired evidence.”). Even if Price was entitled to call witnesses in this federal hearing, it appears he was able to do so. Although the only witnesses

at the hearing were Price and debtor, Price submitted declarations from his

other client and from Boisvert, the potential lender. 

4986 IN THE MATTER OF LEHTINEN
be sanctionable, and [was] furthermore aware that [he] stood

accused of having acted in bad faith.” Id. at 549 (internal quotations omitted). 

Price argues that “he did not receive such advance notice

of the particular alleged misconduct or the disciplinary rule

the court intended to base its sanctions upon.” The record

belies his argument. 

1. Notice of Alleged Misconduct 

[10] With respect to the “particular alleged misconduct,”

the Second OSC identified four instances of alleged misconduct, stated that “the facts point to a clear conflict of interest,”

and specified the evidence required regarding the sanctionable

conduct. Accordingly, Price was fully aware of the conduct

charged against him. 

Price argues that he had no notice of the possibility of sanctions for his failure to appear at the meeting of creditors. In

the Second OSC, the bankruptcy court stated that it had issued

the First OSC based upon Price’s failure to appear at the

meeting of creditors and the confirmation hearing. It then

stated that the “non-appearance issue” had been resolved by

Price’s excuse and a $300 deduction from Price’s $1,500 flat

rate. Although the Second OSC indicated that the bankruptcy

court would again investigate Price’s failure to appear at the

confirmation hearing, it did not do so with respect to Price’s

failure to appear at the meeting of creditors. The bankruptcy

court did not clarify if this deduction resolved both instances

where Price failed to appear. Thus, Price argues that he could

have reasonably relied upon the Second OSC indicating that

it was no longer at issue. See id. at 550. 

The BAP noted this but found that any error was harmless

because the “other derelictions . . . support the sanction

imposed.” Lehtinen, 332 B.R. at 414. Although Price is entitled to a rebuttable presumption that the error was prejudicial,

IN THE MATTER OF LEHTINEN 4987
see Obrey v. Johnson, 400 F.3d 691, 699-701 (9th Cir. 2005),

based upon the record, it does appear that the bankruptcy

court would have imposed the same sanctions even if it did

not consider Price’s failure to appear at the meeting of creditors. If anything, Price’s other (mis)conduct, like the conflict

of interest and the letter falsely stating that debtor’s case had

been dismissed, was far more egregious than his failure to

appear at a § 341 meeting. 

2. Notice of the Basis for Sanction Authority

[11] Here, the bankruptcy court’s Second OSC expressly

stated that it was considering sanctions “pursuant to this

court’s inherent sanction powers (In re DeVille, 361 F.3d 539

(9th Cir. 2004) for bad faith conduct.” The bankruptcy court

also ordered Price to show cause “why he should not be suspended or disbarred from practice in this court.” While it is

true that the bankruptcy court’s final order relied in part on

specific provisions of the California Rules of Professional

Conduct and California Business and Professions Code that it

did not identify in the Second OSC, its invocation of its inherent power is sufficient to satisfy due process concerns. See

DeVille, 361 F.3d at 548-50 (holding due process accorded

even when the order to show cause stated Rule 9011 as basis

for sanctions when attorney was ultimately sanctioned under

inherent sanction authority because sanctionee was aware that

he was accused of acting in bad faith). Furthermore, as just

explained, the factual bases for the violations of the Rules and

Codes were explicitly included in the Second OSC. 

B. Bad faith/willful misconduct

[12] Furthermore, the bankruptcy court made the findings

of “bad faith” and “willful misconduct” required for the use

of the inherent sanction power. See Dyer, 322 F.3d at 1196.

Although the bankruptcy court did not explicitly state that

Price’s conduct was performed in “bad faith” or was “willful,” it impliedly did so by finding that his “conduct in this

4988 IN THE MATTER OF LEHTINEN
case was outrageously improper, unprofessional and unethical

under any reading of California’s ethical standards for attorneys.” See Fink, 239 F.3d at 994 (“[S]anctions are available

if the court specifically finds bad faith or conduct tantamount

to bad faith.” (emphasis added)); Toombs v. Leone, 777 F.2d

465, 471 (9th Cir. 1985) (holding that explicit findings are not

required where record supports a conclusion that the sanctioned attorney acted in bad faith).

3 Finally, the evidence

adduced at the hearing (e.g., the five times Price solicited

debtor to serve as a real estate broker for the sale of her house

and the false letter), demonstrates “bad faith” and “willful misconduct.”4

III. N.D. Cal. Civ. R. 11-6 

[13] Price argues that, pursuant to N.D. Cal. Civ. R. 11-6,

the bankruptcy court should have referred the suspension

action to a standing committee. 

“In the federal system there is no uniform procedure for

disciplinary proceedings. The individual judicial districts are

free to define the rules to be followed and the grounds for

punishment.” Weissman v. Quail Lodge, Inc., 179 F.3d 1194,

1198 (9th Cir. 1999) (internal quotations omitted). In the

Northern District of California, the bankruptcy court is

empowered to supervise and discipline attorneys pursuant to

N.D. Cal. Bankr. R. 1001-2, which incorporates N.D. Cal.

3While Dyer notes that “[b]efore imposing sanctions under its inherent

sanctioning authority, a court must make an explicit finding of bad faith

or willful misconduct,” 322 F.3d at 1196 (emphasis added), the Dyer court

cited Fink for this proposition, and as explained above, Fink permits the

imposition of sanctions without an explicit finding, 239 F.3d at 994. 

4

It is unclear “whether the bankruptcy court must find bad faith by clear

and convincing evidence or under a preponderance of the evidence standard.” Dyer, 322 F.3d at 1197 n.20 (noting that this “question [has] not yet

[been] resolved in this circuit”). We need not decide this question today

because here there is clear and convincing evidence of “bad faith” in this

case. 

IN THE MATTER OF LEHTINEN 4989
Civ. R. 11-1 through 11-9. N.D. Cal. Civ. R. 11-6(a) (2004),

titled “Discipline,” provides:

(a) General. In the event that a Judge has cause to

believe that an attorney has engaged in unprofessional conduct, the Judge may do any or all of the

following: 

(1) Initiate proceedings for civil or criminal contempt under Title 18 of the United States Code and

Rule 42 of the Federal Rules of Criminal Procedure;

(2) Impose other appropriate sanctions; 

(3) Refer the matter to the appropriate disciplinary

authority of the state or jurisdiction in which the

attorney is licensed to practice; 

(4) Refer the matter to the Court’s Standing Committee on Professional Conduct; or

(5) Refer the matter to the Chief Judge for her or him

to consider whether to issue an order to show cause

under Civ. L.R. 11-7.

The bankruptcy court apparently imposed Price’s suspension based on subsection (2), which authorizes “other appropriate sanctions.” See N.D. Cal. Civ. R. 11-6(a)(2).

[14] Although the BAP recommends that matters involving

attorney discipline be referred to the standing committee,

Crayton, 192 B.R. at 978, Price’s argument ignores the plain

language of N.D. Cal. Civ. R. 11-6(a), which states that its

procedures are discretionary. The Rule provides available

measures the judge “may” take, not must take, if she has

cause to believe an attorney has engaged in unprofessional

conduct. 

4990 IN THE MATTER OF LEHTINEN
CONCLUSION

[15] We conclude that because Price was accorded due process, the bankruptcy court possessed the inherent power to

suspend him. The BAP’s order is affirmed.

AFFIRMED.

IN THE MATTER OF LEHTINEN 4991