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FILED

FEB 04 2016

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT ORDERED PUBLISHED

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NC-15-1149-JuKuW

)

FAROUK E. NAKHUDA, ) Bk. No. 14-41156-RLE

)

Debtor. )

______________________________)

)

)

ANDREW W. SHALABY, )

)

Appellant, )

)

v. ) O P I N I O N

)

PAUL J. MANSDORF, Trustee, )

)

 Appellee. )

______________________________)

Argued and Submitted on January 21, 2016

at San Francisco, California 

Filed - February 4, 2016

Appeal from the United States Bankruptcy Court

for the Northern District of California

Honorable Roger L. Efremsky, Bankruptcy Judge, Presiding

_________________________

Appearances: Andrew W. Shalaby argued pro se; Dennis D. Davis

of Goldberg, Stinnett, Davis & Linchey, argued

for appellee Paul J. Mansdorf, chapter 7 trustee. 

_________________________

Before: JURY, KURTZ, and WANSLEE,* Bankruptcy Judges.

* Hon. Madeleine C. Wanslee, United States Bankruptcy Judge

for the District of Arizona, sitting by designation.
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JURY, Bankruptcy Judge:

The bankruptcy court issued an Order to Show Cause (OSC)

directing Andrew W. Shalaby (Shalaby), the attorney for chapter

7

1 debtor Farouk E. Nakhuda, to show cause why he should not be

required to disgorge fees he had been paid and sanctioned for

violations of Rule 9011. After a hearing, the bankruptcy court

issued a Memorandum Decision finding that Shalaby asserted

numerous positions in filed documents without an adequate basis

in law or fact. As a result, the court imposed sanctions

consisting of: (1) non-compensatory monetary sanction for $8,000

payable to the bankruptcy court for violations of Rule 9011(b);

(2) disgorgement of $4,000 that was paid to Shalaby by debtor

under § 329; (3) suspension from the practice of law in the

bankruptcy courts for the Northern District of California until

he had completed 24 hours of continuing legal education in

bankruptcy law and 3 hours of continuing legal education in

ethics (except for those cases which he had already appeared);

and (4) suspension of his electronic case filing (ECF)

privileges until he had completed the ECF training provided by

the clerk’s office.2 The bankruptcy court entered an Order On

Memorandum Decision Re Order To Show Cause (Sanctions Order). 

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.

2 Subsequent to the filing of this appeal, Shalaby paid the

sanctions, was reinstated to practice before the bankruptcy court

in the Northern District, and had his e-filing privileges

restored. 

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Thereafter, Shalaby moved to amend the Sanctions Order which the

bankruptcy court denied (Amendment Order). Shalaby appeals from

the Sanctions Order and the Amendment Order. 

We AFFIRM in part and REVERSE in part. We AFFIRM the

court’s decision as to disgorgement under § 329 and suspension

of Shalaby’s ECF filing privileges. We REVERSE the bankruptcy

court’s decision finding that Shalaby’s conduct violated 9011(b)

and imposing sanctions of $8,000 payable to the clerk of the

bankruptcy court. When the court initiates sanctions under Rule

9011(c)(1)(B), the party ordered to show cause is afforded no

“safe harbor” opportunity to correct his or her conduct. 

Because there is no “safe harbor,” the Ninth Circuit has

instructed courts to apply a higher “akin to contempt” standard

than in the case of party-initiated sanctions when applying Rule

9011(b). United Nat’l Ins. Co. v. R & D Latex Corp., 242 F.3d

1102, 1116 (9th Cir. 2001). Here, the bankruptcy court applied

a “reasonableness” standard to Shalaby’s conduct, which is the

appropriate standard for party-initiated sanctions, but not for

court-initiated sanctions. Moreover, the court’s factual

findings do not support the heightened “akin to contempt”

standard. 

 I. FACTS3

On March 16, 2014, Shalaby filed a skeletal chapter 7 case

for debtor. Paul Mansdorf was appointed the chapter 7 trustee

(Trustee). 

At the time of his filing, debtor was operating five

3 The facts leading up the OSC are comprehensively set

forth in the bankruptcy court’s Memorandum Decision dated April

27, 2015. 

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laundromats in the San Francisco and Vallejo area, either as

sole proprietorships or as partnerships. The petition listed no

trade names for debtor and indicated the debts were primarily

consumer debts rather than business debts. The Schedules listed

no executory leases, no interests in partnerships and no

payments to landlords.

On March 31, 2014, Shalaby filed the first version of the

Schedules and Statement of Financial Affairs (SOFA). Schedule A

listed a house valued at $433,000 and encumbered with secured

debt of approximately $380,000. Schedule B listed personal

property consisting of $600 in debtor’s wallet, $4,000 in a

checking account, and $211 in a Fidelity Investments account

(Fidelity Account). Schedule B did not list any accounts

receivable or interests in partnerships, but did list certain

office equipment valued at $900 and inventory of detergents and

sodas valued at $300. Schedule C claimed a homestead exemption

and an exemption in office equipment and inventory under

California Code of Civil Procedure (Cal. Civ. Proc.) § 704.760

(tools of the trade). Schedule I stated debtor was married with

two adult children and was self-employed with $4,359 monthly net

income from operating a business.

Question no. 18 in the SOFA listed five laundromat

businesses in San Francisco and Vallejo. Question no. 21

identified two of the laundromats as partnerships in which

debtor owned a 50% interest and two as sole proprietorships.4 

On April 10, 2014, Shalaby filed the first amendments to

the Schedules. Schedule B listed the same cash and bank

4 The fifth laundromat was evidently closed.

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accounts and now listed a $15,000 account receivable. Amended

Schedule B also listed debtor as the 50% owner of the

partnership laundromats valued at $45,000 and added laundry

machines valued at $437,485, but did not list the sole

proprietorship laundromats. Schedule C listed the same

homestead exemption and the same exemptions in the office

equipment and inventory and added an exemption valued at $0 for

the partnership laundromats (erroneously referring to Cal. Civ. 

Proc. § 704.010, the exemption for motor vehicles). Schedule D

added a secured creditor owed $437,485 with a lien on the

laundry machines. 

Before the meeting of creditors took place, Shalaby and 

Trustee exchanged emails. The April 7, 2014 email from Trustee

to Shalaby asked about the laundromats’ entity status and

requested Shalaby to confirm that any sole proprietorship

businesses were not operating and that no estate property was

being used. Shalaby replied that the sole proprietorship

laundromats were still in business. In response, Trustee

informed Shalaby that debtor could not operate a sole

proprietorship business while he was in chapter 7. 

Despite this prior communication, when debtor appeared with

Shalaby at the § 341 meeting of creditors on April 16, 2014

(§ 341 meeting), he testified that he was still operating the 

laundromats. Trustee’s counsel advised debtor that he could

not continue to use business income to pay rent to the landlords

and could not operate the businesses. Shalaby responded: “I am

not sure you are right about that . . . it is not so black and

white.” Shalaby requested Trustee to provide him with authority

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for this position and give him an opportunity to respond. 

A. The Turnover Order

On April 17, 2014, Trustee filed an Ex Parte Application to

Cease Debtor’s Operations and Turnover Non–Exempt Funds and

Records. Attached to the application was the supporting

declaration of Trustee’s counsel describing debtor’s

post-petition use of estate assets and continued operation of

the sole proprietorship laundromats. 

On the same date, the bankruptcy court signed an order

granting the application, which required debtor to (1) turnover

all of his bank account proceeds; (2) shut down the sole

proprietorship laundromats and give the keys to Trustee; 

(3) stop using estate assets for the operation of any business;

and (4) provide Trustee with bank records for all post-petition

activity. 

Instead of advising debtor to comply with the Turnover

Order, on April 17, 2014, Shalaby filed an Ex Parte Application

for Briefing and Hearing Schedule for Motion to Remove Trustee

and Motion to Set Aside Turn–Over Order or Direct Turn–Over to

New Trustee. The application sought to remove Trustee because

of the way he had conducted the § 341 meeting. Shalaby also

asserted that the Turnover Order suffered from a “due process

problem” as it had been granted without debtor being given an

opportunity to respond. Shalaby further argued: “The

[T]rustee’s proposal is simply to wipe out those businesses and

shut them down immediately, which will cause irreparable harm to

debtor as well as to potential creditors.” The bankruptcy court

denied the application on April 18, 2014. 

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On April 21, 2014, Shalaby filed an Ex Parte Application to

Set Aside Turnover Order for Failure to Notice Hearing. The

application argued that the Turnover Order was issued in

violation of the Fifth and Fourteenth Amendments. Shalaby

further asserted that the “laundry machines that are not

exempted as tools of the trade are secured by liens and there is

no equity” and the “two businesses themselves are upside-down

with secured liens. It appears they are exempted.” This

application did not cite the Bankruptcy Code or any relevant

case law (although it did cite the Fourteenth Amendment and case

law regarding due process). 

On April 22, 2014, Shalaby filed an amended application. 

The amended application repeated his previous arguments and

proposed that the bankruptcy court amend its Bankruptcy Local

Rule (BLR) 9014–1 to provide for hearings on ex parte matters. 

In Shalaby’s own words:

Even if laws do in fact exist that mandate the closure

of a business upon filing of a Chapter 7, there is a

fundamental due process violation insofar as there is

no notice given to the debtor of any such law in

existence. Even to the extent that if such a law

should exist, ignorance of the law is no excuse, the

debtor would still be entitled to challenge any such

law under the 5th Amendment or otherwise if he

believes it to be unconstitutional. The point is,

however, that the debtor has been entirely deprived of

any and all opportunity to respond to the [T]rustee’s

application.

In connection with this amended application, Shalaby filed

a Notice of Ex Parte Motion and Motion to Set Aside Turnover

Order for Failure to Notice Hearing which purported to give

notice that a hearing would be held two days later. The

bankruptcy court denied this application on April 22, 2014. 

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On May 6, 2014, Shalaby filed a Motion for Return of

Exempted Property and Removal of Trustee which was set for

hearing on June 4, 2014. In the motion, Shalaby sought the

return of the sole proprietorship laundromats and the “working

capital and other exempted funds” held by Trustee. He also

sought removal of Trustee on the grounds “exempted property does

not belong to the Trustee.” Shalaby asserted that Trustee had

“taken control of two exempted assets, laundromats, and has

terminated and destroyed those businesses without any benefit to

the estate, maliciously, and in retaliation.” Trustee opposed

and, in an accompanying declaration, Trustee’s counsel detailed

numerous examples of Shalaby’s ignorance of fundamental chapter

7 practice and incompetent representation of debtor. He also

declared that “to date,” debtor has never turned over any funds

to Trustee despite the bankruptcy court’s order. 

Shalaby responded by withdrawing as “moot” the part of the

motion requesting a return of the cash in the checking account

and the sole-proprietorship laundromats. However, Shalaby

withdrew this reply two days later and then filed another

document entitled Withdrawal of Moot Portions of Motion and

Reply to Opposition to Motion to Remove Trustee. Shalaby

withdrew this motion in its entirety one day before the June 4th

hearing “on grounds of obsolescence.” 

B. Turnover Order Appeal

On April 24, 2014, Shalaby filed a Notice of Appeal to this

Panel, purporting to appeal the Turnover Order, the order

denying his request to stay the Turnover Order, and the order

denying his request to set aside the Turnover Order. On the

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same day that Shalaby filed his designation of the record on

appeal, he filed another document in the bankruptcy court

captioned Objection to Turnover Motion. This objection repeated

his prior arguments and again requested the bankruptcy court to

hold a hearing on the turnover issue. 

On May 1, 2014, Shalaby filed a motion to have the appeal

decided by the Ninth Circuit on the basis that the question of

law presented (i.e., whether the bankruptcy court can issue a

turnover order on an ex parte basis) was “of national importance

with no other authority in existence in any jurisdiction.” 

Following briefing, the Panel heard oral argument on

February 19, 2015. The day after oral argument, Shalaby filed a

motion to dismiss the Turnover Order appeal. 

On March 3, 2015, the Panel issued its Memorandum and

Judgment affirming the Turnover Order and denying the late

motion to dismiss the appeal. In its decision, the Panel

confirmed the applicable provisions of the Bankruptcy Code which

provide that a chapter 7 debtor is required to cease operation

of a business upon filing for bankruptcy and which required

debtor to surrender the business assets to Trustee. 

On March 9, 2015, Shalaby filed Debtor’s motion for

rehearing of the BAP ruling affirming the Turnover Order, which

the Panel denied on March 19, 2015. Shalaby then filed a notice

of appeal of the BAP ruling to the Ninth Circuit. That appeal

was subsequently dismissed on debtor’s request due to a

settlement with Trustee. 

C. Contested Exemptions 

Between April 10 and April 25, 2014, Shalaby filed several

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amendments to the Schedules. On May 6, 2014, Shalaby filed

fourth amended Schedules B and C. This version of Schedule B

listed the same cash, bank accounts, account receivable, and the

partnership laundromats. This Schedule C claimed the same

exemptions in the office equipment and inventory, added an

exemption for $3,719 in the business checking account under Cal.

Civ. Proc. § 704.060 (tools of the trade), and also claimed the

partnership laundromats exempt, valuing the exemption at $0

under Cal. Civ. Proc. § 704.010 (motor vehicles). It did not

exempt the $15,000 account receivable or the $600 cash in

debtor’s wallet.

On May 7, 2014, Trustee filed an objection to this version

of Schedule C on the grounds that (1) money in a checking

account does not qualify as a tool of the trade under Cal. Civ.

Proc. § 704.060; (2) the $0 exemption in the partnership

laundromats appeared to be an admission that there was no claim

of exemption in these; and (3) the entire Schedule C was

objectionable because it had not been signed by debtor. 

Trustee also stated that his investigation concerning these

matters was continuing and that these objections would be set

for hearing when that investigation concluded.

On June 2, 2014, Shalaby filed fifth amended Schedules B

and C. This version of Schedule B listed the same cash,

checking account, and account receivable. It added the sole

proprietorship laundromats with an “unknown” value. This

Schedule C again exempted as tools of the trade (Cal. Civ. Proc.

§ 704.060) the office equipment, inventory, the $3,719 in the

checking account, and — for the first time — the $600 cash in

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debtor’s wallet. It also added an exemption based on Cal. Civ.

Proc. § 706.050 (exempt earnings) for the account receivable,

now characterizing it as “income not yet paid.” The values in

this version of Schedule B and C were cut in half under the

theory that not all community property was property of the

estate. Thus, for example, the checking account balance became

$1,971 and the account receivable became $7,350.

On June 3, 2014, Trustee filed an Amended Objection to

Debtor’s Claim of Exemptions, incorporating his prior objection

to exemptions and objecting to the exemption in alleged earnings

due to debtor from a company named Borismetrics because they

were the same account receivable previously listed in Schedule

B. Trustee also objected to the 50% valuations of community

property assets as violating § 541(a)(2). 

On June 12, 2014, Shalaby filed yet another version of

Schedules B and C, which increased the amount claimed in

connection with the account receivable from $7,350 to $8,930.56

as exemptible earnings. 

On July 10, 2014, Trustee filed an Amended and Supplemental

Objections to Exemptions. It incorporated the prior objections

and said:

Debtor continues to claim a portion of his bank

account proceeds exempt under California Code of Civil

Procedure § 704.060 [sic] but has increased the amount

of exemption from $7,350 to $8,930.56. The Trustee

objects to said amended claim of exemption on the

ground that it has no factual or legal basis as a

claim of exemption in debtor’s bank account proceeds.

D. Exemption Disputes and Turnover Compliance

On July 22, 2014, the Trustee filed Memorandum of Points

and Authorities in Support of Notice of Status Conference

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Regarding Objections to Claims of Exemption and Request for

Turnover of Assets (July Motion), along with a Notice setting a

hearing for September 3, 2014. There was no motion accompanying

the pleadings. In the points and authorities, Trustee sought

turnover of cash which debtor had, on advice of Shalaby, refused

to turn over to Trustee (i.e., $600 cash, $3.12 in savings

account, $3,719 in checking account, $2,471 accounts receivable

collected post-petition, and $211 in the Fidelity Account, for a

total of $7,274.41). It also restated Trustee’s objections to

the claimed exemptions in the account receivable recharacterized

as exempt wages and the exemptions claimed in bank accounts as

tools of the trade. The July Motion was supported by Trustee’s

counsel’s declaration attaching excerpts from debtor’s

deposition at which debtor testified that he was not an employee

of Borismetrics, the entity owing the accounts receivable. 

The day before the hearing on the July Motion, Shalaby

filed an Opposition and Objection to Procedurally Defective

Motion. This opposition described the July Motion as

procedurally defective because it was “not a status conference,”

but “facially a motion on a contested matter that is up on

appeal, fully briefed, and awaiting a ruling.” Shalaby further

contended that the “motion” was contested and thus it should be

denied for failure to comply with BLR 9013 or 9014. Because

the bankruptcy court wanted to afford the parties an opportunity

to address whether the pending appeal of the Turnover Order

precluded a ruling on all or part of the July Motion, the court

continued the hearing from September 3, 2014, to October 1,

2014, and set a briefing schedule regarding whether the pending

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appeal affected the court’s jurisdiction. The bankruptcy court

also allowed Shalaby an opportunity to file a brief regarding

the validity of his claimed exemptions.

On September 10, 2014, Shalaby filed his brief on the

merits of the exemption issues, supported by the declarations of

debtor and Shalaby. Shalaby claimed that Trustee’s objections

to the exemption in the wages paid by Borismetrics to debtor and

in the bank accounts was untimely. With respect to the bank

account exemption, Shalaby argued that Trustee failed to

identify any assets in dispute. He further asserted that it was

correct to cut the amount of the Borismetrics receivable to

$8,930 to reflect debtor’s non-filing spouse’s community

property share, citing Cal. Family Code § 760, but failed to

explain why § 541(a)(2) did not control. Shalaby also

maintained that the Borismetrics payment of $8,930 was exempt as

wages, but he failed to address debtor’s prior deposition

testimony that he was not an employee of Borismetrics. 

In addition, Shalaby raised a new issue regarding debtor’s

unchallenged $100,000 homestead exemption. The bankruptcy court

had previously entered an order approving the estate’s

compromise with debtor through which debtor had paid $30,000 to

purchase the non-exempt equity in his house from the estate

(Sale Order). Shalaby now argued that the Sale Order should be

vacated “in the interest of justice” because — months after the

fact — he had obtained an appraisal from which he had concluded

that the house was worth less than Trustee’s broker had said it

was worth. He asked the bankruptcy court to enter an order

directing Trustee to return this $30,000 (plus a $600 appraisal

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fee) to debtor.

Trustee filed a supplemental brief on the merits of the

exemptions. Trustee largely repeated his prior arguments and

pointed out that debtor had agreed to the compromise embodied in

the Sale Order and this belated attack on it was procedurally

and substantively inappropriate. Trustee also maintained that

debtor had amended his Schedules a number of times and, each

time, Trustee filed a new set of objections to debtor’s claims

of exemption within thirty days of the amendments. 

At the hearing on October 1, 2014, the bankruptcy court

sustained Trustee’s objections to the claimed exemptions and

denied debtor’s belated attack on the Sale Order. The court

also indicated it intended to issue an OSC directed at Shalaby

for the positions he had taken during the case. The court then

issued an order sustaining Trustee’s objection to the

exemptions, denying debtor’s request for return of the $30,000

in connection with the Sale Order, and ordering debtor to turn

over (1) $600 in cash; (2) $2,741 account receivable collected

post-petition; and (3) $211.29 from the Fidelity Account to

Trustee within ten days of the order (October 2 Order). 

The day after this hearing, Shalaby filed a request that

the court order a settlement conference. In the request,

Shalaby stated: “Unfortunately, I must agree with the court,

largely, that with a bit more effort and legal research, many of

the problems and matters disputed could have and would have been

avoided.” He then quoted Rule 9011(b) and said:

[W]hile a matter may explain the reason I admittedly

failed to diligently research some of my legal

contentions and presented incorrect interpretations of

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applicable law (e.g. community property interest being

irrelevant to exemptions, misapplication of 11 U.S.C.

§ 542(a), and other matters), that matter is quite

personal and difficult to disclose on the record

and/or in pleadings on an OSC hearing. 

It went on to state “I do in fact recognize my mistakes, and

appreciate the court’s frustration.” Shalaby suggested that the

“practical thing” to do was to try to “settle the OSC/sanction

by negotiating a reasonable payment to the trustee.” The

bankruptcy court declined to order a settlement conference. 

E. The OSC

On November 4, 2014, the bankruptcy court issued the OSC.5

The OSC describes seven specific factual and legal positions

taken by Shalaby in connection with the issues that culminated

in the October 1 hearing: (1) he argued that Trustee’s

objections to exemptions were not timely when they were; (2) he

argued that the value of assets was reduced by 50% as non-estate

property ignoring § 541(a)(2); (3) he reclassified the

Borismetrics account receivable as exemptible wages without

factual or legal support (ignoring debtor’s deposition testimony

5 Creditor Mercy Commercial California (MCC) also responded

to the OSC. MCC received relief from stay on May 29, 2014, to

enforce the lease and recover the premises at 1305 Polk Street,

San Francisco, California and that order was final. Relying on

the order, counsel for MCC served a non-default notice of

termination of the occupancy on debtor and then filed and served

an unlawful detainer action in the San Francisco Superior Court. 

MCC alleged that debtor, through Shalaby’s office, filed a Notice

of Stay of Proceedings, which blocked the state court action from

proceeding. This conduct, MCC asserted, was a misuse of the

bankruptcy process and falsely stated to the state court that

there was a stay when the opposite was true. As a result of this

tactic, MCC incurred additional legal fees and expenses and

delay. MCC urged the bankruptcy court to examine this particular

act of debtor and counsel. 

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that he was not an employee); (4) he argued that Trustee’s

objections had not identified any assets in dispute; (5) he

argued that a bank account was exempt as a tool of the trade

with no supporting legal authority; (6) he attacked the Sale

Order which was a final order; and (7) he argued debtor had no

obligation to turn over assets based on his assertion that the

scheduled values were inconsequential.

The OSC directed Shalaby to appear and show cause why he

should not be required to disgorge the fees he had been paid or

should not be otherwise sanctioned for his conduct in the case.

Based on the seven illustrative factual and legal positions that

Shalaby had taken, the specific violations described in the OSC

were: (1) making arguments not warranted by existing law or

non-frivolous arguments for its extension, modification or

reversal; (2) failing to ensure that allegations and factual

contentions had evidentiary support; (3) his inability or

unwillingness to obtain the most basic knowledge of bankruptcy

law or engage in the legal analysis necessary to competently

represent debtor; (4) harming the estate by forcing Trustee to

use limited estate assets to respond to the frivolous arguments

and positions; and (5) failing to obtain original signatures on

documents filed with the court. The court identified its

authority for issuance of the OSC and possible sanctions as the

court’s inherent powers and § 105, § 329(b), Rule 9011(b) and

(c), and paragraphs 8 and 9 of the ECF Procedures for the

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bankruptcy court.6

Immediately after the OSC was issued, Shalaby filed an Ex

Parte Application to advance the December 4, 2014 hearing date

to November 20, 2014, due to a scheduling conflict. Shalaby

proposed that the OSC response deadline be advanced to November

14, 2014. The bankruptcy court granted his request and reset

the OSC hearing date and response deadline. 

On November 6, 2014, Shalaby filed an Ex Parte Application

for Order Directing Disgorgement in Discharge of the OSC. 

There, Shalaby moved the court for an order directing him to

disgorge $4,000 in discharge of the OSC. Shalaby further said: 

“This counsel is very sorry that the bankruptcy has gone so

awry, and hopes that his offer of voluntarily disgorgement of

the fees will be to the Court’s satisfaction.” Trustee filed an

objection to the application asserting that the damages to the

estate were in excess of $30,000. The bankruptcy court

subsequently denied the application. 

Shalaby then responded to the OSC on the merits supported

by his and debtor’s declarations. Shalaby asserted that

sanctions should not be imposed in the case because there was a

good faith disagreement as to the interpretation of law and that

imposing sanctions would chill his First Amendment rights. He

further argued that (1) there was improper notice of a hearing

for the July Motion; (2) Trustee’s exemption objections should

6 These paragraphs contain the requirements for signatures

on electronically filed documents and retention requirements. 

Under BLR 5005-2(d), a debtor’s counsel must obtain and retain

wet signatures of debtor for ECF. 

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have been overruled; (3) § 541(a)(2) did not prevent him from

taking the position that the non-filing spouse’s community

property share of non-exempt assets was not property of the

estate and that the bankruptcy court should have held a trial on

that issue; (4) the court should hold a trial on whether the

Borismetrics payment was exemptible wages; (5) Trustee had not

identified specific assets in dispute; (6) funds in a bankruptcy

account could be exempted as tools of the trade; (7) the Sale

Order could be challenged after the fact because a trustee

should not be allowed to collect money or property from a debtor

based on an artificially high valuation; and (8) his advice to

debtor that he did not need to turn over assets to Trustee was

justified because:

[A]s a matter of logic, a property that has very low

value, or a ‘negative’ value, is not an asset of the

estate due to the lack of a value. This belief is

based on an understanding of the trustee’s statutory

[duty] as specified in 11 U.S.C. § 704. Generally,

the trustee’s duty is to collect only assets of value

that exceed the exemptions and to distribute those

assets to the creditors. 

Trustee responded to Shalaby with the declaration of his

counsel which attached multiple exhibits evidencing alleged

frivolous positions asserted by Shalaby. Shalaby objected to

the declaration arguing that every matter therein was a

privileged First Amendment communication pursuant to Cal. Civ.

Code § 47, and that the declaration was the “equivalent of a

SLAPP suit.” Shalaby also argued that the declaration was an

“undisguised attempt to circumvent the safe harbor provisions”

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

On November 20, 2014, the bankruptcy court held a hearing

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on the OSC. At the conclusion of the hearing, the court

requested a supplemental declaration from Trustee’s counsel

regarding attorney’s fees incurred for the matters identified in

the OSC. Trustee’s counsel subsequently filed a declaration

showing total fees and expenses of $58,679.89 through December

8, 2014, of which $14,231 were attributable to dealing with the

issues outlined in the OSC.

Shortly after, Shalaby filed a motion to recuse Judge

Efremsky based on alleged impartiality due to the fact Shalaby

indicated an intent to file a lawsuit against Trustee. In the

motion, Shalaby discussed numerous incidents where, in his

opinion, the bankruptcy judge showed bias and prejudice against

debtor and his counsel. In reaching his opinion, Shalaby

stated:

[H]e has now spoken with several attorneys and nonattorneys after they had listened to the audio of the

OSC hearing and that every one expressed an

unequivocal belief and conclusion that Judge Efremsky

appears very biased and prejudiced in favor of the

trustee and against the debtor and his counsel. 

The bankruptcy court denied the recusal motion. 

On April 27, 2015, the bankruptcy court issued its

Memorandum Decision finding that Shalaby asserted numerous

positions during debtor’s case without an adequate basis in law

or fact in violation of Rule 9011. Accordingly, the court

imposed sanctions consisting of: (1) non-compensatory monetary

sanction for $8,000 payable to the bankruptcy court; 

(2) disgorgement of $4,000 that was paid to him by debtor; 

(3) suspension from the practice of law in the bankruptcy courts

for the Northern District of California until he had completed

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24 hours of continuing legal education in bankruptcy law and 3

hours of continuing legal education in ethics (except for those

cases which he had already appeared); and (4) suspension of his

e-filing privileges until he had completed the ECF training

provided by the clerk’s office. On the same day, the court

entered the Sanctions Order. 

On April 30, 2015, Shalaby filed an application to amend

the Memorandum Decision and Sanctions Order. The bankruptcy

court denied that application. 

Shalaby filed a timely appeal from the Sanctions Order and

Amendment Order.7

 II. JURISDICTION

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

§§ 1334 and 157(b)(2)(A). See In re Nguyen, 447 B.R. 268, 275

(9th Cir. BAP 2011)(en banc) (citing In re Brooks–Hamilton, 400

B.R. 238, 244 (9th Cir. BAP 2009) (acts leading to suspension

occurred in matter central to administration of bankruptcy

case). We have jurisdiction under 28 U.S.C. § 158.

7 Shalaby’s notice of appeal (NOA) states that he also

appeals from the Memorandum Decision. The Memorandum Decision

does not contain a judgment, order or decree. See Rule 8001(a). 

The NOA also does not mention the bankruptcy court’s order

denying Shalaby’s motion for recusal. As a result, the recusal

order is not before us in this appeal. In addition, as Shalaby

has not asserted any arguments on appeal that relate to the

bankruptcy court’s denial of his application to amend, those

arguments are waived. Smith v. Marsh, 194 F.3d 1045, 1052 (9th

Cir. 1999). 

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III. ISSUES8

Did the bankruptcy court abuse its discretion in imposing

sanctions against Shalaby under Rule 9011?

Did the bankruptcy court abuse its discretion in ordering

disgorgement under § 329 of all fees and costs paid by debtor to

Shalaby?

Did the bankruptcy court abuse its discretion by suspending

Shalaby’s e-filing privileges until he participated in the

training provided by the clerk’s office?

 IV. STANDARDS OF REVIEW

All aspects of an award of sanctions are reviewed for an

abuse of discretion. Orion v. Haffman (In re Kayne), 453 B.R.

372, 380 (9th Cir. BAP 2011); In re Nguyen, 447 B.R. at 276. 

We review the bankruptcy court’s decision regarding the

proper amount of legal fees to be awarded to the debtor’s

attorney for an abuse of discretion. Hale v. U.S. Trustee, 509

F.3d 1139, 1146 (9th Cir. 2007).

We also review the bankruptcy court’s interpretation and

application of a local rule for an abuse of discretion. Price

v. Lehtinen (In re Lehtinen), 564 F.3d 1052, 1058 (9th Cir.

2009). 

Review for abuse of discretion has two parts. First, we

“determine de novo whether the bankruptcy court identified the

correct legal rule to apply to the relief requested.” U.S. v.

8 Shalaby has framed the issues differently and asserts

that all the issues he has raised on appeal are questions of law

subject to de novo review. We disagree with this contention. 

Upon our review of his brief and the record, we reorganized and

rephrased the issues. 

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

so, we then determine under the clearly erroneous standard

whether the bankruptcy court’s factual findings and its

application of the facts to the relevant law were

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

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

Id. at 1262. Findings of fact are given great deference in this

context. DeLuca v. Seare (In re Seare), 515 B.R. 599, 614 (9th

Cir. BAP 2014).

We may affirm on any ground supported by the record. 

Shanks v. Dressel, 540 F.3d 1082, 1086 (9th Cir. 2008). 

V. DISCUSSION

A. The Bankruptcy Court’s Authority To Issue Sanctions

A bankruptcy court has the inherent authority to regulate

the practice of attorneys who appear before them. Chambers v.

NASCO, Inc., 501 U.S. 32, 43 (1991); Caldwell v. Unified Capital

Corp. (In re Rainbow Magazine, Inc.), 77 F.3d 278, 284-85 (9th

Cir. 1996). “Inherent powers are the exception, not the rule,”

and, therefore, “must be exercised with great caution.” 

Chambers, 501 U.S. at 64. “A specific finding of bad faith

. . . must ‘precede any sanction under the court’s inherent

powers.’” United States v. Stoneberger, 805 F.2d 1391, 1393

(9th Cir. 1986). The bankruptcy court also has express power to

impose sanctions pursuant to Rule 9011 and its local rules. See

In re Nguyen, 447 B.R. 380-81. A bankruptcy court may suspend

an attorney from the practice of law for violations of Rule

9011. In re Brooks-Hamilton, 400 B.R. at 249. 

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B. Rule 9011

The initial basis for imposing sanctions on Shalaby is Rule

9011, the bankruptcy counterpart to Civil Rule 11. Case law

interpreting Rule 11 is applicable to Rule 9011. Marsch v.

Marsch (In re Marsch), 36 F.3d 825, 829 (9th Cir. 1994).

Rule 9011(b) requires parties and their attorneys to ensure

papers filed before a bankruptcy court 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” and that “allegations and other factual contentions

have evidentiary support . . . .” Rule 9011(b)(2) and (3). 

Rule 9011(b) incorporates a reasonableness standard which

focuses on whether a competent attorney admitted to practice

before the involved court could believe in like circumstances

that his actions were legally and factually justified. See

Zaldivar v. City of Los Angeles, 780 F.2d 823, 830-31 (9th Cir.

1986). 

When assessing sanctions sua sponte under Rule

9011(c)(1)(B) and under the law of this Circuit, the bankruptcy

court is required to issue an order to show cause to provide

notice and an opportunity to be heard and to apply a higher

standard “akin to contempt” than in the case of party-initiated

sanctions. R&D Latex Corp., 242 F.3d at 1115-16. The reason

behind the heightened standard is because, unlike partyinitiated motions, court-initiated sanctions under Rule

9011(c)(1)(B) do not involve the 21-day safe harbor provision

for the offending party to correct or withdraw the challenged

submission. Id. at 1116 (citing Barber v. Miller, 146 F.3d 707,

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711 (9th Cir. 1998)). 

In Barber v. Miller, the Ninth Circuit emphasized the

distinctions between a party-initiated motion for sanctions

under Civil Rule 11 and sanctions imposed upon the court’s own

initiative, finding they were not the equivalent. There, the

district court granted the defendant’s motion to dismiss the

plaintiff’s complaint with prejudice. The order granting the

motion indicated that the district court would retain

jurisdiction to consider sanctions. After dismissal, the

defendant notified the attorney for the plaintiff by letter that

it would be seeking sanctions and then it filed the motion. The

district court granted the motion, awarding the defendant $2,500

in sanctions against the attorney. The attorney appealed and

the defendant cross-appealed on the amount. The Ninth Circuit

reversed the award of sanctions because the motion for sanctions

did not comply with the safe harbor provision under Civil Rule

11. 

The court then considered whether the district court’s

retention of jurisdiction for purposes of a sanctions motion

could be equated to an election by the court to impose sanctions

on its own motion. The Ninth Circuit concluded that it was not

the equivalent, noting the distinction between a party-initiated

motion for sanctions and sanctions awarded on the court’s own

initiative. The Ninth Circuit observed that the district court

awarded sanctions to a party under circumstances which did not

meet the standard for court-initiated sanctions. The court also

noted that “the fact the district court exercised its discretion

to award sanctions on motion of a party does not necessarily

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mean that the court would exercise its discretion to impose

sanctions on its own motion for the same conduct” since show

cause orders “will ordinarily be issued only in situations that

are akin to a contempt of court. . . .” 146 F.3d at 711 (citing

Civil Rule 11, Adv. Comm. Notes to 1993 Amend.).9

Here, the bankruptcy court expressly applied the objective

reasonableness standard to Shalaby’s numerous violations of Rule

9011. The court dismissed Shalaby’s contentions that his “good

faith belief” or “opinion” supported his positions on the basis

that his subjective intent was irrelevant since his conduct is

measured against a reasonableness standard which consists of a

competent attorney admitted to practice law before the court. 

With respect to each violation of Rule 9011(b) set forth in the

OSC, the bankruptcy court expressly applied this standard to

each of its factual findings.

 The evidence in the record supports the bankruptcy court’s

9 Civil Rule 11, Adv. Comm. Notes to 1993 Amend., states

in relevant part: 

The power of the court to act on its own initiative is

retained, but with the condition that this be done

through a show cause order. . . . Since show cause

orders will ordinarily be issued only in situations

that are akin to a contempt of court, the rule does not

provide a ‘safe harbor’ to a litigant for withdrawing a

claim, defense, etc., after a show cause order has been

issued on the court’s own initiative.

Rule 9011, Adv. Comm. Notes to 1997 Amend. states:

This rule is amended to conform to the 1993 changes to

[Civil Rule] 11. For an explanation of these

amendments, see the advisory committee note to the 1993

amendments to [Civil Rule] 11.

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ruling; it certainly shows that Shalaby’s legal positions and

arguments were objectively frivolous under the reasonableness

standard. In fact, Shalaby admitted as much when he requested

the court to order a settlement conference. There, he

acknowledged that with a bit more effort and legal research,

many of the problems and matters disputed could have and would

have been avoided. He further stated that there was a “personal

matter” which may explain why he admittedly failed to diligently

research some of his legal contentions and presented incorrect

interpretations of applicable law (e.g. community property

interest being irrelevant to exemptions, misapplication of

§ 542(a), and other matters), but the record does not show what

that “personal matter” was or whether it was a legitimate excuse

for Shalaby’s admitted digressions. Finally, Shalaby went on to

say that he recognized his mistakes, and appreciated the

“court’s frustration.” Therefore, at least then, Shalaby seemed

to acknowledge that he had a duty to conduct a reasonable

inquiry into the law and underlying facts before filing the

documents, and that had he done so, many of the problems could

have been avoided.10 

But even if Shalaby’s positions were frivolous under the

reasonableness standard, the standard for court-initiated

sanctions in the Ninth Circuit is “akin to contempt.” Although

we considered remand so that the bankruptcy court could apply

10 In his brief, Shalaby has not directed us to any clearly

erroneous facts which would warrant disturbing the bankruptcy

court’s decision based on its application of the reasonableness

standard. Instead, he continues to assert that his positions

were correct under the guise of zealously representing his

client. 

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the proper legal standard, we ultimately conclude that certain

factual findings made by the bankruptcy court foreclose that

consideration. 

Admittedly, the “akin to contempt” standard is neither

well-developed nor consistently applied. However, case law

makes it clear the alleged transgressions must exceed those for

party-initiated sanctions. In United National Insurance Company

v. R & D Latex Corporation, 242 F.3d 1102, the Ninth Circuit

reversed the district court’s imposition of sua sponte sanctions

after examining the sanctioned attorneys’ statements made in a

Notice of Related Cases (Notice) they filed in connection with a

removed action. Looking at all the circumstances, the court

found the attorneys’ actions “not so egregious as to merit sua

sponte sanctions,” and concluded that the “Notice was in neither

purpose nor substance ‘akin to contempt.’” Id. at 1116, 1118. 

Accordingly, at bottom, the “akin to contempt” standard

seems to require conduct that is particularly egregious and

similar to conduct that would be sanctionable under the

standards for contempt. See MyMedicalRecords, Inc. v. Jardogs,

LLC, 2015 WL 5445987, at *2 (C.D. Cal. 2015) (finding that bad

faith analysis applied to court-initiated sanctions under Civil

Rule 11); Brown v. Royal Power Mgt., Inc., 2012 WL 298315, at *4

(N.D. Cal. Feb. 1, 2012) (finding that assertion of a position

knowing that it is baseless “constituted bad faith and lacked

forthrightness with the court” and thus was “akin to

contempt.”); Stone v. Wolff Properties LLC, 135 Fed.Appx. 56,

2005 WL 1389893, at *2 (9th Cir. June 13, 2005) (reversing

district court’s imposition of sua sponte sanctions, finding

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that appellant’s “conduct, though perhaps not laudable, was not

so ‘egregious’ as to be considered ‘beyond the pale.’”) (citing

R & D Latex Corp., 242 F.3d at 1116-18); Sanai v. Sanai, 408

Fed.Appx. 1, 2010 WL 2782636, at *3 (9th Cir. July 12, 2010)

(affirming sua sponte sanction award by district court which

issued OSC, gave appellants an opportunity to be heard, and

expressly found they acted in bad faith); Lynch v. Cal. Ct. of

Appeal, Third Dist., 2008 WL 2811197, at *7 (July 14, 2008)

(noting that prior to a sua sponte imposition of sanctions under

Civil Rule 11, the court must find that counsel’s conduct was

particularly egregious, i.e., “akin to a contempt of court”);

compare Darulis v. Iaria, 2008 WL 5101932, at *4 (S.D. Cal. Dec.

1, 2008) (finding conduct was not of the nature of a violation

of a court order and therefore could not be punished sua sponte

under Civil Rule 11).

Here, the bankruptcy court’s findings do not support the

heightened standard. First, the court found that nothing in the

record suggested that Shalaby had an improper purpose under Rule

9011(b)(1). Next, in considering the sanctions to impose, the

bankruptcy court cited the ABA standards which include an

inquiry into whether the attorney acted intentionally, knowingly

or negligently. The bankruptcy court did not find Shalaby acted

knowingly or intentionally, but that at a minimum, his conduct

was negligent. The heightened standard of “akin to contempt”

requires more than ignorance or negligence on the part of

Shalaby. See Barber, 146 F.3d at 711 (noting that bad faith in

an analogous context requires more than mere negligence). While

we do not condone Shalaby’s conduct, these factual findings

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demonstrate that his conduct was neither in purpose nor

substance “akin to contempt.” 

In sum, the bankruptcy court erred in sanctioning Shalaby

for his conduct under Rule 9011 because it applied the wrong

legal standard for sua sponte sanctions and its factual findings

do not support — and in fact foreclose — the heightened standard

of “akin to contempt.” Accordingly, the court abused its

discretion in issuing sanctions under Rule 9011. 

C. Section 329

Section 329(a) requires an attorney representing a debtor

in a bankruptcy case to file a statement regarding the

compensation agreed to be paid for services in the case and the

source of the compensation. Section 329(b) provides in relevant

part: “If such compensation exceeds the reasonable value of any

such service, the court may cancel any such agreement, or order

the return of any such payment. . . . .” (Emphasis added.) 

Bankruptcy Code § 329 is implemented by Rules 2016 and 2017. 

Rule 2016(b) provides that every attorney for a debtor, whether

or not the attorney applies for compensation, shall file the

statement required by § 329 of the Code. Rule 2017(a) provides

that on the court’s own initiative, the court may determine

whether any payment by the debtor, made directly or indirectly

and in contemplation of the filing of a petition, to an attorney

for services rendered or to be rendered, is excessive.

The standard applied under § 329(b) to determine the

reasonable value of fees is set forth in § 330. Hale v. U.S.

Trustee (In re Basham), 208 B.R. 926, 931 (9th Cir. BAP 1997). 

“The burden is upon the applicant to demonstrate that the fees

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are reasonable.” Id. at 931-32. Section 330(a)(3) states that

in determining the amount of reasonable compensation, the court

should consider the nature, extent, and value of the services

rendered, taking into account all relevant factors, including

(A) the time spent on the services; (B) the rates charged for

the services; (C) whether the services were necessary or

beneficial at the time the services were rendered; (D) whether

the services were performed within a reasonable amount of time

commensurate with the complexity, importance, and nature of the

problem, issue, or task addressed; (E) whether the person

demonstrated skill and experience in the bankruptcy field; 

(F) whether the compensation is reasonable based on the

customary compensation charged by comparably skilled

practitioners in cases other than bankruptcy cases. 

The reasonable value of services rendered by a debtor’s

attorney “is a question of fact to be determined by the

particular circumstances of each case. The requested

compensation may be reduced if the court finds that the work

done was excessive or of poor quality.” In re Spickelmier, 469

B.R. 903, 914 (Bankr. D. Nev. 2012); see also In re Basham, 208

B.R. at 933 (disgorgement upheld for incomplete and inaccurate

schedules, improperly claimed exemptions, improperly noticed

plan confirmation hearing). 

The bankruptcy court’s OSC put Shalaby on notice of a

potential disgorgement under this section. On appeal, Shalaby

contends § 329 “could not, as a matter of law, apply in this

case.” Shalaby does not fully explain his position on this

point, but presumably he contends that § 329 does not apply

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since $4,000 was disproportionate to the services rendered. 

Shalaby is mistaken. As noted by the bankruptcy court, the

question is not how much time Shalaby spent on the case and what

he believes his theoretical unpaid bill might be. Rather, the

question is whether the $4,000 he was paid was excessive for

what he accomplished for debtor in this case. 

The bankruptcy court properly considered the value of

Shalaby’s services under § 330(a)(3). Specifically, the court

found factors (C) whether the services were necessary or

beneficial and (E) skill and experience in the bankruptcy field

“particularly important here.” Applying those factors, the

court found:

First, as the issues listed in the OSC and the above

discussion show, his services were not necessary or

beneficial to the debtor and they were costly and

detrimental for the estate. Second, it is apparent

that Mr. Shalaby lacked skill and experience in this

field; he lacked competence in the relevant

substantive and procedural areas required to handle

this case.

His handling of this case showed he did not understand

the implications of filing a chapter 7 case and did

not understand the basic concepts, including the

debtor’s duties, the Trustee’s duties, the nature of a

bankruptcy estate, the duty to turn over assets, the

rules regarding abandonment, the concept of rejection

of an executory lease, or the importance of

administrative rent. If he were competent, multiple

amendments to the schedules would not have been

necessary and he would have known he had to have the

debtor sign them, as the applicable ECF rules require.

The record supports these findings and thus they are not clearly

erroneous.

Shalaby also complains that of the $4,000, $306 was for the

filing fee. According to Shalaby, § 329 cannot be used to

direct a debtor’s counsel to “disgorge” filing fees as this

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would be a Fifth Amendment takings violation. Shalaby provides

no analysis to support his conclusory statement nor does he

bother to provide authority. The takings clause provides that

“private property [shall not] be taken for public use without

just compensation.” U.S. CONST. amend. V. Suffice to say that

a debtor’s attorney does not have a property interest in his or

her compensation that is protected under the Takings Clause of

the Fifth Amendment. 

In sum, the bankruptcy court applied the correct legal rule

and its finding that the $4,000 paid to Shalaby by debtor

exceeded the reasonable value of his services was not illogical,

implausible, or without support in the record. Therefore, the

bankruptcy court did not abuse its discretion when it ordered

disgorgement of all fees, including the filing fee within the

total amount to be disgorged. See DeLuca v. Seare (In re

Seare), 515 B.R. 599, 621 (9th Cir. BAP 2014) (finding court did

not abuse its discretion in including filing and credit report

fees within the total amount to be disgorged). 

D. Suspension of ECF filing privileges

The bankruptcy court stated in the OSC that it was

considering sanctions based on Shalaby’s admitted failure to

obtain debtor’s signature on documents filed with the court

through ECF. The court further observed that Shalaby had

admitted that it was his practice to not have his debtor clients

sign any of the papers filed on their behalf. In response to

the OSC, Shalaby maintained that he could not locate the ECF

procedures on the bankruptcy court’s website. The bankruptcy

court noted that the procedures were readily available on the

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website and that Shalaby was required to know the rules and

abide by them if he was going to practice in that bankruptcy

court. Accordingly, the bankruptcy court determined that the

remedy for Shalaby’s “flagrant violation” was to suspend his efiling privileges until he participated in the training provided

by the clerk’s office. 

On appeal, Shalaby acknowledges his oversight regarding the

requirements for wet signatures. He asserts, however, that such

oversight is not sanctionable under any provision of Rule 9011

nor § 105, especially since he rectified the error before the

OSC hearing. He further argues that the bankruptcy court erred

by not considering nonmonetary measures. We are not persuaded. 

As noted by the bankruptcy court, Shalaby was a registered

user of the bankruptcy court’s CM/ECF system and thus bound by

the procedures and rules governing electronic filings. The

court’s ECF Administrative Procedures ¶¶ 8 and 9 state in

relevant part: 

A Registered Participant who electronically files a

document . . . shall be deemed to have certified under

penalty of perjury that he or she has personally

reviewed the document.

Pleadings . . . that are required to be verified . . .

and all affidavits or other pleadings in which a person

verifies, certifies, affirms or swears under oath or

penalty of perjury concerning the truth of matters set

forth in that pleading or document (‘Verified

Pleading’) may be filed electronically . . . . 

The electronic filing of a Verified Pleading

constitutes a representation by the Registered

Participant . . . that the Registered Participant has

in his or her possession at the time of filing the

fully executed original, signed pleading/document. 

BLR 5005-2(d) provides:

In the case of a Signatory who is not a Registered

Participant, as in the case of documents requiring

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multiple signatures or documents signed by a third

party such as a debtor, the filing of the document

constitutes the filer’s attestation that the filer has

possession of (i) an original ink signature, (ii) a

copy of the original ink signature that has been

electronically scanned, or (iii) a copy of the

original ink signature transmitted by facsimile. The

filer shall maintain records to support this

attestation for subsequent production to the Court, if

so ordered, or for inspection upon request by a party,

until five years after the case or adversary

proceeding in which the document was filed is closed.

Shalaby violated the ECF Administrative Procedures and BLR

5005-2(d) — he admitted he did not have debtor’s original

signatures on the documents he filed. 

The bankruptcy court possesses the inherent authority to

manage attorney practices before it and to impose sanctions for

violation of its local rules. See Singh v. Singh (In re Singh), 

2014 WL 842102, at *8 (9th Cir. BAP March 4, 2011). BLR 9011-1

states:

Any petition, schedule, statement, declaration, claim

or other document filed and signed or subscribed under

any method (digital, electronic, scanned) adopted

under the rules of this Court shall be treated for all

purposes (both civil and criminal, including penalties

for perjury) in the same manner as though manually

signed or subscribed.

Failure of counsel or of a party to comply with any

provision of these rules or the Bankruptcy Rules shall

be grounds for imposition by the Court of appropriate

sanctions.

We can affirm the bankruptcy court’s imposition of

sanctions against Shalaby under this rule. 

BLR 9011-1 authorized the bankruptcy court to use its

authority to suspend Shalaby’s e-filing privileges until he took

further training. Moreover, contrary to Shalaby’s contention,

this remedy for the violation was a nonmonetary remedy and

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Shalaby has already complied.11 Finally, unlike the court in In

re Singh, nowhere did the bankruptcy court purport to rely on

§ 105 for its sanctioning power in connection with Shalaby’s

violations of the ECF procedures. Thus, the issue of Shalaby’s

“bad faith” was irrelevant. In sum, the bankruptcy court did

not abuse its discretion when it sanctioned Shalaby by

suspending his e-filing privileges until he participated in the

training session offered by the clerk’s office. 

E. Request for Judicial Notice

On August 30, 2015, Shalaby filed a request for judicial

notice of the several documents pursuant to Fed. R. Evid. 201: 

A cover email from Attorney Dennis Davis, received by

Appellant on August 19, 2015, advising that the

Chapter 7 trustee collected $76,176.73 in funds in

this bankruptcy case. Attached to the email is Mr.

Davis’ “First and Final Application” for compensation,

document number 285, which sets forth the amount of

fees he has claimed at $62,627.50, and costs of

$2,983.00.

Judge Efremsky’s order awarding fees of $62,627.50 and

costs of $2,983.99 to Attorney Dennis Davis.

A letter dated December 12, 2014 acknowledging receipt

of Appellant’s complaint of judicial misconduct no.

14-90182 pertaining to Judge Roger L. Efremsky.

These documents are not relevant to the disposition of this

11 Shalaby suggests that since he complied with the

Sanctions Order by taking the ECF class, this portion of his

appeal may be moot. We do not think Shalaby’s compliance with

the Sanctions Order renders this portion of his appeal moot as we

have jurisdiction to consider the legal question of whether

Shalaby’s conduct was sanctionable. See Fleming & Assocs. v.

Newby & Tittle, 529 F.3d 631, 640 (5th Cir. 2008) (“Any

non-monetary portion of the sanctions not rendered moot by

settlement is appealable for its residual reputational effects on

the attorney.”); Dailey v. Vought Aircraft Co., 141 F.3d 224, 226

(5th Cir. 1998) (“This appeal is not moot because the [temporary]

disbarment on the attorney’s record may affect her status as a

member of the bar and have other collateral consequences.”). 

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appeal. As judicial notice is inappropriate where the facts to

be noticed are irrelevant, see Ruiz v. City of Santa Maria, 160

F.3d 543, 548 n. 13 (9th Cir. 1998), we deny the request for

judicial notice. 

VI. CONCLUSION

 For the reasons stated, we AFFIRM in part and REVERSE in

part. 

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