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FILED

OCT 07 2015

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOTFOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. WW-14-1262-JuKiF

)

CINDY SHANNON ANDERSON, ) Bk. No. 09-43049-PBS

)

Debtor. )

______________________________)

)

MARK G. OLSON, )

)

Appellant, )

)

v. ) M E M O R A N D U M*

)

CINDY SHANNON ANDERSON; DON )

THACKER, Chapter 7 Trustee, )

)

Appellees. )

______________________________)

Argued and Submitted on September 25, 2015

at Seattle, Washington 

Filed - October 7, 2015

Appeal from the United States Bankruptcy Court

for the Western District of Washington

Honorable Paul B. Snyder, Bankruptcy Judge, Presiding

________________________

Appearances: Chris Graver of Keller Rohrback LLP argued for

appellant Mark G. Olson; Thomas W. Stilley of

Sussman Shank LLP argued for appellee Don

Thacker, Chapter 7 Trustee. 

________________________

Before: JURY, KIRSCHER, and FARIS, Bankruptcy Judges.

* This disposition is not appropriate for publication.

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8024-1.

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Appellee chapter 71 trustee, Don Thacker (Trustee),

employed appellant attorney, Mark G. Olson (Olson), to pursue a

personal injury claim (PI claim) held by debtor, Cindy S.

Anderson (Debtor). More than three years later, Olson settled

the PI claim for $41,000 without Trustee’s knowledge or consent. 

Olson paid himself a portion of the settlement proceeds and

disbursed the rest to Debtor. These actions were in direct

contravention of the express terms of Olson’s employment

agreement with Trustee, which required Trustee’s approval of any

settlement, and the bankruptcy court’s employment order, which

required Olson to obtain court approval of his fees. Moreover,

Olson disbursed property of the bankruptcy estate to Debtor who

had not yet claimed an exemption in the PI Claim. Debtor spent

most of the money by the time Trustee learned about the

settlement.

Trustee asked Olson and Debtor to turn over the settlement

proceeds. Trustee settled with Debtor, but Olson refused the

request. Trustee filed a motion seeking turnover of the

settlement proceeds, followed by a separate motion for sanctions

against Olson under Rule 9011 and 28 U.S.C. § 1927. After a

hearing, the bankruptcy court entered an order granting

Trustee’s motions for turnover and for sanctions, but deferred

deciding the amount of the sanctions until Trustee’s attorneys

1 Unless otherwise indicated, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. 

“Rule” references are to the Federal Rules of Bankruptcy

Procedure and “Civil Rule” references are to the Federal Rules of

Civil Procedure.

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filed their fee application.2 The order regarding the sanctions

became final when the court subsequently entered an order fixing

the amount of the sanctions as $13,696 in fees and $639.02 in

costs, which amounts represented fees and costs incurred by

Trustee’s counsel (Sanctions Order). Olson appeals from the

Sanctions Order. We AFFIRM.

I. FACTS3

The material facts are undisputed. Debtor filed a

chapter 7 bankruptcy petition on April 30, 2009. Debtor neither

disclosed nor exempted the PI Claim in her schedules. On

June 15, 2009, Debtor amended her Schedule B to include the

PI Claim as an asset but she did not assert an exemption in it.

In June 2009, Debtor hired Olson to represent her in

connection with the PI claim. Since her injuries were sustained

at a hotel and casino in Nevada, Olson associated with a Nevada

attorney, Justin Wilson. 

On June 29, 2009, Trustee and Olson entered into an

Attorney-Client Fee Agreement (Fee Agreement), under which Olson

agreed to pursue the PI claim on behalf of the bankruptcy

2 The order also required Olson to turn over the amount he

had paid himself from the settlement proceeds and denied his

motion for attorneys’ fees for representing the estate. Pursuant

to an Order Defining Scope of Appeal filed on July 7, 2014, a

motions panel determined that the order was final as to the

turnover and attorney fee denial which Olson did not timely

appeal. However, the Sanction Order was not final since the

court had not yet determined the amount of sanctions. Therefore,

the scope of this appeal was limited to the sanction award as

reflected in the orders of February 14 and May 6, 2014.

3 We borrow heavily from the bankruptcy court’s recitation

of the facts in its February 14, 2014 ruling.

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estate. Under the agreement, Olson was entitled to a forty

percent contingency fee if the matter was settled prior to

trial, forty-five percent if the case went to trial, and fifty

percent if there was an appeal. The terms of the agreement

required Trustee’s approval prior to any settlement: “Neither

[Olson] nor [Trustee] shall settle or compromise any aspect of a

lawsuit without agreement between client and attorney.”

On August 28, 2009, Trustee filed an application to employ

Olson. Olson signed a Declaration of Disinterestedness, in

which he declared under penalty of perjury that he had read and

was familiar with Bankr. Local Rule 2016-1 regarding

compensation of professionals. On the same day, the bankruptcy

court entered an order approving Olson’s employment. The

employment order provided that any compensation to Olson was

subject to court approval.

On November 2, 2009, Debtor received her § 727 discharge,

but her case remained open.

On August 9, 2010, Olson, in connection with co-counsel

Justin Wilson, filed a personal injury lawsuit on behalf of

Debtor against the Nevada hotel and casino.

In December 2012, without Trustee’s knowledge or consent,

and without obtaining the bankruptcy court’s approval, Debtor

and Olson settled the lawsuit for $41,000. After receiving this

amount, Olson paid himself a forty percent contingency fee of

$16,4004 and expenses of $3,376.22, and distributed the

4 Olson asserts that he gave one-half of this amount, or

$8,200, to Wilson.

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remaining $21,223.78 to Debtor, again without communicating with

Trustee or obtaining the bankruptcy court’s approval.

In January 2013, Trustee sent an email to Olson inquiring

about the status of the PI Claim. Olson informed Trustee that

the claim had been settled and the proceeds used to pay his

attorneys’ fees with the remainder distributed to Debtor. 

According to Trustee, he advised Olson that he had no authority

to settle the case or pay himself attorneys’ fees, and that he

should not have disbursed any proceeds to Debtor as she had

claimed no exemption in the PI Claim. Trustee demanded that

Olson and Debtor turn over the settlement proceeds, but both

failed and refused to do so.

On March 14, 2013, Debtor filed an amended Schedule C,

claiming for the first time that $20,200 of the settlement

proceeds were exempt. Trustee objected to Debtor’s claim of

exemption.

On May 16, 2013, Trustee filed a motion for turnover,

seeking to recover the $41,000 in settlement proceeds from

Debtor and Olson. Debtor and Olson objected to the motion. On

August 8, 2013, Olson filed a declaration that included the

following:

7. . . . Given that Ms. Anderson’s bankruptcy had

been completely discharged and there were no

outstanding bills or creditors, it is not clear what

Mr. Thacker’s intentions were regarding these funds.

As the funds were entirely distributed in accordance

with the fee agreements, there was nothing left from

the modest settlement to pass on to Mr. Thacker in any

event.

8. . . . However, given that Mr. Thacker had agreed to

the contingency fee arrangement and that he had agreed

to at least the $16,000 personal exemption amount to

be awarded to Ms. Anderson in the personal injury

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matter, I do not believe that he had a legal right to

the $50,000 he is claiming in this proceeding. 

Mr. Thacker’s position is unreasonable and being taken

in bad faith.

Trustee disputed those statements, contending that they were

without evidentiary support and not warranted by existing law in

violation of Rule 9011.

In September 2013, Trustee and Debtor settled Trustee’s

objection to her claim of exemption for $3,883.78. Trustee

later testified at the evidentiary hearing on the turnover

motion that his primary motivation for the settlement was that

Debtor already had spent most of the settlement proceeds and

remained insolvent. The bankruptcy court entered an order

approving the settlement on December 26, 2013.

On October 9, 2013, in a final effort to resolve the matter

and avoid further fees and costs, Trustee served Olson’s

attorneys with a letter dated October 9, 2013, and a Motion for

Sanctions, giving Olson twenty-one days to withdraw his

objection to the turnover motion and to agree to turn over the

settlement proceeds or face a motion for sanctions for his

continuing unjustifiable refusal to turn over the funds.5

Trustee received no response to that letter. Before the

turnover motion was heard, on November 5, 2014, Trustee filed a

motion for sanctions (Sanctions Motion).

On December 17, 2013, Olson sought approval of his fees in

the amount of $16,400 and costs of $3,376.22 by filing a fee

5 There is no dispute that the service of the motion

complied with the “safe-harbor” provisions under

Rule 9011(c)(1)(A).

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application. 

On February 3, 2014, the bankruptcy court conducted an

evidentiary hearing on the turnover motion, the Sanctions

Motion, and Olson’s fee application. 

On February 14, 2014, the bankruptcy court issued an oral

ruling. The bankruptcy court acknowledged that Trustee sought

turnover of the settlement proceeds under § 542(a). However, as

Olson had already paid himself his fees and costs from the

settlement, the court found that Trustee’s motion was in effect

a motion to disgorge fees.6 The bankruptcy court noted that it

had broad and inherent authority to deny or order disgorgement

of compensation when an attorney failed to meet the requirements

of §§ 327, 329, 330, or 331 under In re Alvarado, 496 B.R. 200,

213 (N.D. Cal. 2013) (citing Am. Law Ctr. PC v. Stanley

(In re Jastrem), 253 F.3d 438, 443 (9th Cir. 2001) (finding that

bankruptcy court had the authority under § 329 to order an

attorney to return fees that it determined were excess or

unreasonable)); In re New River Dry Dock, Inc., 451 B.R. 586,

592 (Bankr. S.D. Fla. 2011) (noting that “[d]isgorgement is the

expected remedy when a professional does not comply with the

Bankruptcy Code or its Rules”). 

In deciding whether Olson was entitled to any fees, the

bankruptcy court considered whether Olson’s services had

benefitted the estate under § 330(a)(3). The court ultimately

6 Under Rule 7001(1) Trustee was required to bring a request

for turnover in an adversary proceeding. By characterizing the

motion as one for disgorgement, Trustee’s request was properly

before the court by motion.

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concluded that his services resulted in a loss, rather than a

benefit to the estate. In reaching this conclusion, the court

found that by settling the PI Claim without authority, Olson

denied Trustee and the court the opportunity to evaluate the

proposed settlement. Thus, it remained unknown whether the

$41,000 settlement was in the best interest of the estate. The

court further found that Olson’s disbursement of $21,223.78 in

settlement proceeds to Debtor caused prejudice to the estate by

at least that amount since by the time Trustee became aware of

the settlement and distribution, Debtor had spent most of the

money. 

When considering the Sanctions Motion, the bankruptcy court

concluded that ¶¶ 7 and 8 of Olson’s declaration filed in

opposition to Trustee’s request for turnover ignored the

uncontested facts in the case and were in direct conflict with

bankruptcy law, including § 330 and Rule 9019. For these

reasons, the bankruptcy court found that Olson’s resistance to

turning over estate property was without a factual or legal

basis in violation of Rule 9011. 

The court also agreed with Trustee that Olson violated

28 U.S.C. § 1927 by unreasonably multiplying the proceedings in

this case when he failed to immediately turn over the settlement

proceeds upon Trustee’s demand. In the end, the bankruptcy

court decided that the estate was entitled to recover the

attorneys’ fees and costs it incurred in pursuing turnover of

the settlement proceeds from Olson, but it required Trustee’s

counsel to file a separate motion to quantify the reasonable

fees. 

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On February 14, 2014, the bankruptcy court entered an order

(1) requiring Olson to turn over (disgorge) $19,776.22 ($16,400

in fees and $3,376.22 in costs) that he paid himself from the

settlement proceeds, (2) denying Olson’s fee application in its

entirety, and (3) awarding sanctions against Olson in an amount

yet to be determined.

Olson did not appeal the turnover order until May 20, 2014. 

The Panel dismissed that appeal, which included the turnover

order and the order denying Olson’s fees, as untimely. That

dismissal was not further appealed.

On April 8, 2014, Trustee’s counsel filed their fee

application seeking $18,696 in fees and $639.02 in costs to be

paid directly by Olson. These fees and costs were incurred in

connection with the turnover motion, the denial of Olson’s

attorneys’ fees, and the Sanctions Motion. Counsel noted that

if these amounts were paid by Olson, the distribution to

creditors of approximately forty-eight percent would not be

diminished. Attached to the declaration accompanying the motion

were the relevant time records.

Olson responded to the motion, contending that he had

already been penalized by the court when it denied his fee

application in its entirety. Olson also maintained that

counsel’s fees were unreasonable and excessive for several

reasons. First, the hourly rate of $430-$450 was unreasonable

and higher than the usual and customary rate for this type of

matter. Second, the number of hours billed was unreasonable

especially as related to the 14.1 hours spent preparing for the

evidentiary hearing. Olson contended this was far more than

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necessary for a less than two hour hearing. Finally, Olson

objected to the allocation of work among available personnel, as

all but 1.9 hours of the 43.4 hours requested were billed by

Mr. Stilley at the highest possible rate. 

On May 6, 2014, the bankruptcy court held a hearing on

Trustee’s attorneys’ fee application. The court found Olson’s

double penalty argument without merit. 

THE COURT: Let me ask you: Is this really a double

penalty? As I understand it, the first issue is

whether he should be entitled to any fees because

there was no approval. Mr. Thacker did not have an

opportunity to even review the settlement; and there

was very little money, as a consequence, that came

into the estate. That’s one issue.

Then the second issue is, given that, whether he

should have been so resistant to the turnover that it

caused the trustee to have to, not only file an action

against him, but take it all the way to an evidentiary

hearing in a case where the law -- when I looked at

it, it seemed fairly clear to me what the end result

would be. 

In the end, the court concluded that the double penalty

argument was, in essence, a motion for reconsideration of the

court’s earlier order which denied Mr. Olson his fees and

concurrently granted sanctions against him. Since Olson did not

seek reconsideration of or appeal that order, the court found

that the order was final and not subject to collateral attack. 

The court next considered the reasonableness of the fees

requested. It found that the hourly rate of $430-$450 per hour

was reasonable. Upon questioning Trustee’s counsel, the court

concluded that the amount of time preparing for the evidentiary

hearing was unreasonable and thus reduced the fees requested by

$5,000. The court also found unpersuasive Olson’s argument that

Trustee’s attorney should have allocated some of the legal work

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to associates with a lower billable hourly rate. Finally, the

court dispensed with Olson’s contention that Trustee’s attorney

should not be awarded fees for opposing his fee application

because it was unlikely that Trustee would have objected to

Olson’s fees if Olson had turned over the settlement proceeds. 

The bankruptcy court entered an order awarding Trustee’s

counsel $13,696 in fees and $639.02 in costs to be paid by

Olson. Olson timely appealed the Sanctions Order on May 20,

2014.

II. JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(A) and (E). We have jurisdiction under

28 U.S.C. § 158.

III. ISSUES

Did the bankruptcy court abuse its discretion by imposing

sanctions against Olson under 28 U.S.C. § 1927?

Did the bankruptcy court abuse its discretion by finding

sanctions were warranted against Olson under Rule 9011 and in

determining that $13,696 in fees and $639.02 in costs was an

appropriate sanction?

IV. STANDARDS OF REVIEW

We review all aspects of a bankruptcy court’s decision to

impose Rule 9011 sanctions for abuse of discretion. Valley

Nat’l Bank v. Needler (In re Grantham Bros.), 922 F.2d 1438,

1441 (9th Cir. 1991). We apply a two-part test to determine

whether the bankruptcy court abused its discretion. United

States v. Hinkson, 585 F.3d 1247, 1261–62 (9th Cir. 2009) (en

banc). First, we consider de novo whether the bankruptcy court

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applied the correct legal standard to the relief requested. Id.

Then, we review the bankruptcy court's fact findings for clear

error. Id. at 1262 & n. 20. We must affirm the bankruptcy

court’s fact findings unless we conclude that they are

“(1) ‘illogical,’ (2) ‘implausible,’ or (3) without ‘support in

inferences that may be drawn from the facts in the record.’” 

Id. at 1262. 

The bankruptcy court has “broad fact-finding powers with

respect to sanctions, and its findings warrant great

deference. . . .” Primus Auto. Fin. Serv., Inc. v. Batarse,

115 F.3d 644, 649 (9th Cir. 1997) (quoting Townsend v. Holman

Consulting Corp., 929 F.2d 1358, 1366 (9th Cir. 1990)(en banc)).

We do not reverse for errors not affecting substantial

rights of the parties and may affirm for any reason supported by

the record. COM-1 Info, Inc. v. Wolkowitz (In re Maximus

Computers, Inc.), 278 B.R. 189, 194 (9th Cir. BAP 2002). 

V. DISCUSSION

A. 28 U.S.C. § 1927

28 U.S.C. § 1927 provides that “[a]ny attorney or other

person admitted to conduct cases in any court of the United

States . . . who so multiplies the proceedings in any case

unreasonably and vexatiously may be required by the court to

satisfy personally the excess costs, expenses, and attorneys’

fees reasonably incurred because of such conduct.” Therefore,

to be sanctionable under 28 U.S.C. § 1927, counsel’s conduct

must multiply the proceedings in both an unreasonable and

vexatious manner. B.K.B. v. Maui Police Dep’t, 276 F.3d 1091,

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1107 (9th Cir. 2002). A finding that the attorney recklessly7

raised a frivolous argument which resulted in the multiplication

of the proceedings is sufficient to impose sanctions under

28 U.S.C. § 1927. Id. 

Olson complains on appeal that the bankruptcy court’s

findings fell short of these standards and thus imposition of

the sanctions based on 28 U.S.C. § 1927 was in error. We need

not address these arguments because the Ninth Circuit does not

consider a bankruptcy court as a “court of the United States.” 

Miller v. Cardinale (In re Deville), 361 F.3d 539, 546 (9th Cir.

2004). Therefore, a bankruptcy court has no power to impose

sanctions under 28 U.S.C. § 1927. Because this was an

alternative ground for imposing sanctions against Olson, the

bankruptcy court’s reliance on 28 U.S.C. § 1927 was harmless

error. See Rule 9005 (incorporating Fed. R. Civ. Proc. 61 which

provides in part: “The court at every stage of the proceeding

must disregard any error or defect in the proceeding which does

not affect the substantial rights of the parties.”).

B. The bankruptcy court did not abuse its discretion by 

imposing sanctions against Olson under Rule 9011.

Rule 9011(b) “Representations to the court” states:

By presenting to the court (whether by signing,

filing, submitting, or later advocating) a petition,

pleading, written motion, or other paper, an attorney

or unrepresented party is certifying that to the best

of the person's knowledge, information, and belief,

formed after an inquiry reasonable under the

circumstances, --

7 At one point in his opening brief Olson concedes that

perhaps he acted recklessly.

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(1) it is not being presented for any

improper purpose, such as to harass or to

cause unnecessary delay or needless increase

in the cost of litigation; 

(2) the claims, defenses, and other legal

contentions therein are warranted by

existing law or by a nonfrivolous argument

for the extension, modification, or reversal

of existing law or the establishment of new

law; 

(3) the allegations and other factual

contentions have evidentiary support or, if

specifically so identified, are likely to

have evidentiary support after a reasonable

opportunity for further investigation or

discovery; and 

(4) the denials of factual contentions are

warranted on the evidence or, if

specifically so identified, are reasonably

based on a lack of information or belief. 

The language of Rule 9011 parallels that of Civil Rule 11. 

Therefore, courts analyzing sanctions under Rule 9011 may

appropriately rely on cases interpreting Civil Rule 11. See

Marsch v. Marsch (In re Marsch), 36 F.3d 825, 829 (9th Cir.

1994). 

An attorney has a duty to conduct a reasonable factual

investigation as well as to perform adequate legal research that

confirms that his position is warranted by existing law (or by a

good faith argument for a modification or extension of existing

law). Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir.

2002). The bankruptcy court must measure the attorney’s conduct

“objectively against a reasonableness standard, which consists

of a competent attorney admitted to practice before the involved

court.” In re Grantham Bros., 922 F.2d at 1441. 

In its oral decision, the bankruptcy court set forth

detailed findings of fact explaining why Olson’s opposition to

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Trustee’s turnover motion violated Rule 9011. Olson does not

point to any specific error in the court’s factual findings,

instead making various arguments as to why sanctions were not

warranted based on his interpretation of the facts and his

subjective belief that he did not act unreasonably. 

Olson contends that while his conduct might have been

deficient, it was based on a misunderstanding of the law which

was not unreasonable since he is not a bankruptcy specialist. 

He further maintains that he had no prior offenses, demonstrated

proficiency in representing the client, and fully disclosed

information about the settlement to Trustee. Olson also asserts

that there was no evidence that a better result was obtainable

or that Debtor could have received a significantly larger jury

verdict. At bottom, this appears to be a “no harm, no foul”

argument.

Next, although the bankruptcy court did not expressly

address the ABA Standards, Olson argues that none of those 

standards are met here:8 (1) whether the duty violated was to a

client, the public, the legal system, or the profession;

(2) whether the attorney acted intentionally, knowingly or

negligently; (3) the seriousness of the actual or potential

injury caused by the attorney’s misconduct; and (4) the

existence of aggravating and mitigating factors. In re Nguyen,

447 B.R. at 277. According to Olson, he violated no duty to his

8 Olson acknowledges that it was not mandatory for the

bankruptcy court to make specific findings regarding the

applicability of the ABA standards under In re Nguyen, 447 B.R.

268, 277 (9th Cir. BAP 2011)(en banc).

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client, he misunderstood the effect of Debtor’s discharge, the

injury was only monetary injury to the estate, and there were

mitigating factors such as added monetary value to the estate

which the bankruptcy court failed to consider.

Olson never argued any of these issues in the bankruptcy

court nor did he mention the ABA standards. Generally, we do

not consider issues raised for the first time on appeal. 

O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.),

887 F.2d 955, 957 (9th Cir. 1989). Further, we review claims of

judicial error and do not address fact-bound issues such as

analyzing whether Olson’s conduct violated ABA factors that the

bankruptcy court never examined. In addition, Olson’s mistaken

belief about the effect of Debtor’s discharge does not warrant

reversal of the bankruptcy court’s decision to award sanctions. 

Rather, the facts in this case support the bankruptcy court’s

exercise of discretion to impose sanctions for Olson’s violation

of Rule 9011. 

The record shows that Olson’s conduct met the standards for

imposition of sanctions under Rule 9011(b)(2) and (3). Olson’s

refusal to turn over property of the estate was squarely

foreclosed by the case law and the Bankruptcy Code and Rules

cited by the bankruptcy court. Further, as the bankruptcy court

properly found, the facts set forth in Olson’s declaration at 

¶¶ 7 and 8 were without evidentiary support given that he had

been employed by the bankruptcy estate and “was aware of the

rules regarding compensation of professionals employed in a

bankruptcy case.” In addition, although not mentioned by the

bankruptcy court, by its express terms, § 542(a) is

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self-executing and does not require that the trustee take any

action or commence a proceeding or obtain a court order to

compel the turnover. See Mwangi v. Wells Fargo Bank, N.A.

(In re Mwangi), 432 B.R. 812, 823 (9th Cir. BAP 2010). Simply

put, Olson’s position was entirely without legal foundation and

the facts alleged in his declaration had no evidentiary support. 

Accordingly, we hold the bankruptcy court did not abuse its

discretion in imposing sanctions.

C. The bankruptcy court did not abuse its discretion in

determining that an award of attorneys’ fees and costs was

an appropriate sanction.

Olson also argues that the bankruptcy court abused its

discretion in awarding sanctions in the amount of $13,696 in

fees and $639.02 in costs by failing to (1) consider whether the

sanction imposed was proportional to the violation committed,

(2) make findings why imposing fees of over $15,000 was

necessary as an effective deterrent, and (3) consider

alternatives to a monetary sanction. Olson further asserts that

the imposition of sanctions together with the denial of his fees

amounts to an impermissible double penalty. This last argument

is the only one he made before the bankruptcy court.9

Once the bankruptcy court decides sanctions are warranted,

the court has wide discretion to determine the appropriate

sanction under Rule 9011. Hudson v. Moore Bus. Forms, Inc.,

836 F.2d 1156, 1163 (9th Cir. 1987). Rule 9011(c)(2) provides

9 Olson did not raise the proportionality or penalty issues

before the bankruptcy court. Therefore, we need not consider

these issues raised for the first time on appeal. In re E.R.

Fegert, Inc., 887 F.2d at 957.

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that in determining the appropriate sanction, a court may, “if

imposed on motion and warranted for effective deterrence,

[issue] an order directing payment to the movant of some or all

of the reasonable attorneys’ fees and other expenses incurred as

a direct result of the violation.” Under Civil Rule 11,

“[r]ecovery should never exceed those expenses and fees that

were reasonably necessary to resist the offending action.”

Fleisher v. Weinberg (In re Yagman), 796 F.2d 1165, 1185 (9th

Cir. 1986). “The measure of sanctions under this language is

not the actual fees and expenses incurred, but those that the

court determines to be reasonable.” Id. The bankruptcy court

here chose to measure the sum necessary to deter future

unwarranted resistance to a legally-mandated turnover of estate

property as the reasonable fees expended in compelling the

turnover and objecting to the unearned fees. 

Under these standards, the record supports the bankruptcy

court’s imposition of sanctions in the amount of $13,696 in fees

and $639.02 in costs. The bankruptcy court properly conducted

an inquiry into the reasonableness of the fees and costs before

awarding sanctions. The court scrutinized the itemized time

records, questioned Trustee’s counsel about various expenses and

hours charged, and ultimately reduced the amount requested based

on its reasonableness determination. Since the sanctions

awarded by the bankruptcy court were properly calculated to

reimburse Trustee’s counsel for unnecessary litigation expenses,

the amount of the sanctions awarded did not constitute an abuse

of discretion.

Olson insists that the bankruptcy court erred by awarding 

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Trustees’ attorneys’ fees and costs as sanctions without

considering that it had denied his fees, claiming that he was

penalized twice for the same conduct. According to Olson, the

double penalty adds up to $34,111.24: denial of $16,400 in fees

and $3,376.22 in costs and sanctions for $13,696 in fees and

$639.02 in costs. The $34,111.24 amount, Olson contends, is

disproportionate to the size of the bankruptcy case and his

conduct. Olson also argues that the sanctions on top of the

denial of his fees transforms the sanctions into punitive

damages or a “penalty” which is not authorized under the

holdings in Price v. Lehtinen (In re Lehiten), 564 F.3d 1052,

1059 (9th Cir. 2009) (holding that the bankruptcy court’s

inherent sanction authority does not authorize significant

punitive damages), and In re DeVille, 280 B.R. 483, 494 (9th

Cir. BAP 2002) (finding that Rule 9011(c)(2) limits any monetary

sanction that is imposed pursuant to a sua sponte order to a

penalty payable to the court).

The bankruptcy court properly rejected Olson’s double

penalty theory. While the bankruptcy court’s decision to deny

his fees and impose sanctions involved some of the same conduct,

the denial of Olson’s fees was based on his breach of the Fee

Agreement and employment order and violation of § 330 and

Rule 9019, whereas the sanctions were imposed for his violation

of Rule 9011. In applying § 330 standards to Olson’s request

for fees, the bankruptcy court did not need to consider whether

the denial of his fees was a sufficient deterrent for purposes

of Rule 9011. The denial of fees was not a deterrent, but

rather was compelled by application of the § 330 standards to

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the Fee Agreement and Olson’s performance under that Agreement.

In contrast, the award of Rule 9011 sanctions was based

solely on the pleadings signed and filed by Olson in opposition

to Trustee’s motion for turnover. Olson’s position in

opposition to turnover, which was not supported by law or fact,

left Trustee with no alternative but to incur the added expense

of pursuing recovery. Therefore, after finding Olson violated

Rule 9011, the bankruptcy court had to determine what sanction

would accomplish the purpose of deterrence. See Rule 9011(c)

(sanction imposed by a court should “be limited to what is

sufficient to deter repetition of such conduct or comparable

conduct by others similarly situated”). The imposition of

sanctions in the form of attorneys’ fees and costs is

specifically authorized under Rule 9011(c) for violations of

Rule 9011(b). By awarding Trustee’s counsel their reasonable

fees, the bankruptcy court implicitly determined that a lesser

sanction would not effectively deter Olson or others in his

position. We will not disturb this discretionary determination

on appeal.

VI. CONCLUSION

Having found no error, we AFFIRM.

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