N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
B R IAN A. GLASSER , Esquire , a s suc c e s sor to M arc S. Kirsc hne r a s truste e of the Ye llowstoneC lub Liquida ting Trust, Plaintiff - Appe lle e , v. TIM OTHY L. B LIXSETH, De fe nda

nt - Appe lle e , C HR ISTOPHER

C ONANT, form e r c ounse l for the De fe nda

nt, Third pa

rty - Appe lla nt. No. 14-56184

D.C . No. 2:11-c v-08283-GAF-SP M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the C e ntra l Distric t of C a lifornia Gary A. Fe e ss, Distric t Judge , Pre siding Argue d a nd Subm itte d Fe brua

ry 25, 2016 Pa sa de n a , C a l ifornia B e fore : KOZINSKI, PAEZ, a nd B E R Z ON, C irc uit Judge s. 

# F IL ED MAY02 2016 M OLLY C. DW Y E R, CLERK U. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by 9th C ir. R . 36-3.C hristophe r C ona nt (“ C ona nt” ) a ppe a ls the distric t c ourt’ s orde r granting sa nc tions a ga inst him

for filing a

frivolous c ounte rc la i m

on be ha lf of his c lie nt, Tim othy B l ixse th (“ B lixse th” ). W e re ve rse . 1. The distric t c ourt a b use d its disc re tion by orde ring sa nc tions a ga inst C ona

nt unde r 28 U.S.C . § 1927 be c a u se tha t se c tion doe s not a llow for theim position of sa nc tions ba se d

on initial p l e a dings, suc h a s a c ounte rc la im
. DeDios v . Int’l Re alty & Inv s. , 641 F.3d 1071, 1076 (9th C ir. 2011); In re K e e gan Mgmt. C

o. , 78 F.3d 431, 435 (9th C ir. 1996). 2. The distric t c ourt a l so e rre d in gra nting sa n c tions under its inhe re nt powe rs. B e fore aw arding sa

nc tions under its inhe re nt powe rs, a c ourt “ m ust m ake an e xplic it finding tha

t c ounse l’ s c onduc t c onstitute d or wa s ta nta m ount to ba d fa ith.” Primus Auto. Fin. Se

r v s ., Inc . v . Batarse , 115 F.3d 644, 648-49 (9th C i r. 1997) (inte rna l quota

t ion m a rks omitte d). Suc h a

finding “ is wa

rrante d whe re an attorne y knowingly

or re c kle ssly

ra ise s a frivolous a

rgum e nt.” Id. at 649 (inte rna l quota tion
m arks om itte d). The distric t c ourt c o nc l ude d tha t B lixse th’ s c ounte rc la im wa s frivolous for two re a sons: 1) “ it [wa s] a sse rte d a g a inst Kirsc hne r in his individua l c a p a c i ty , in viola tion of Fe de ra l R

ule of C ivil Proc e d

ure 13,” and 2) “ B lixse th [did] not [se e k]

2le ave from

the B ankruptc y

C ourt to file the c ounte rc la im s a ga inst Kirsc hne r in his offic ia l c a pa c ity , in c ontra

ve ntion of Barton [ v . Barbour , 104 U.S. 126 (1881)] .” As to thefirst re a son, a lthough B lixse th did im prope rly nam e Kirsc hne r in his pe rsona l c a

pa c ity , B lixse th prom

ptly sought le a

v e to a m e nd his c ounte rc la im

to nam e Kirsc hne r in his offic ia l c a pa c ity a s truste e onc e the de fe c t wa s brought to his atte ntion. This quick re s ponse m ilita te s a ga i nst a

finding of ba d fa ith. As to these c o n d re a son, it is true tha t the Barton doc trine prohibits a c la im ant from

suing a ba nkruptc y truste e without first re c e i ving a pprova l from

the ba nkruptc y c ourt. In reC

row n Vantage

, Inc
. , 421 F.3d 963, 970-71 (9th C ir. 2005). B lixse th fa ile d to obtain prior a pprova l for his c ounte rc l a im s a ga inst Kirsc hne r. None the le ss, this c a se involve d the unusua l situa tion whe re the ba nkruptc y truste e volunta

rily and a ffirm ative ly

file d suit in the

C e ntra l Distric t of C a lifornia . In light of C o n ant’ s be l ie f that B lixse th’ s c ounte rc la im s we re c om pulsory , it wa s re a s ona

ble for C ona

nt to inc lude B lixse t

h’ s c o unte rc l a im s in his re sponsive ple a ding without se e king le ave of the ba nkruptc y c ourt. The distric t c ourt a l so c ite d “ the ‘ sc orc he d e arth’ a p proa c h de m o nstra

te d by B lixse th in theba

nkruptc y and othe r proc e e dings” to support its finding of ba d fa ith. B ut B lixse t

h’ s a pproa c h in othe r proc e e d ings doe s not show tha t C ona nt a c te d in ba d fa ith he re . Although the c o unte rc la im s m ay

ultim ate l y

have be e n 3im

prope r, C o na

nt did not file the m

in ba d fa ith a

nd the distric t

c o urt should not have im pose d sa nc tions a g a inst him
. RE V E RSE D .

4