Source: http://openjurist.org/967/f2d/1109
Timestamp: 2015-05-30 14:44:53
Document Index: 784128462

Matched Legal Cases: ['§ 547', '§ 550', '§ 1927', '§ 158', '§ 158', '§ 158', '§ 158']

967 F2d 1109 In the Matter of Excello Press Incorporated Appeal of Daniel a Zazove Attorney for | OpenJurist
967 F. 2d 1109 - In the Matter of Excello Press Incorporated Appeal of Daniel a Zazove Attorney for	Home967 f2d 1109 in the matter of excello press incorporated appeal of daniel a zazove attorney for
967 F2d 1109 In the Matter of Excello Press Incorporated Appeal of Daniel a Zazove Attorney for 967 F.2d 1109
26 Collier Bankr.Cas.2d 1512, 22 Fed.R.Serv.3d 959,Bankr. L. Rep. P 74,643
In the Matter of EXCELLO PRESS, INCORPORATED, Debtor.Appeal of Daniel A. ZAZOVE, Attorney for Debtor.
Nos. 90-3455 and 90-3459.
Argued Dec. 3, 1991.Decided June 11, 1992.
Matthew F. Kennelly (argued), Cotsirilos, Stephenson, Tighe & Streicker, Chicago, Ill., for Daniel A. Zazove.
David Schachman (argued), Julia A. Fenton, Sachnoff & Weaver, Chicago, Ill., for Robert M. Schrayer Co.
Daniel A. Zazove, Karen Walin, Towbin & Zazove, Chicago, Ill., for Excello Press, Inc.
Daniel Zazove ("Zazove"), a Chicago attorney, filed a complaint on behalf of Excello Press, Inc. ("Excello"), debtor and plaintiff, against defendant Associated Agencies, Inc. ("Associated") for recovery of three allegedly preferential payments Excello made to Associated. Those payments made were for insurance coverage. The first two, totalling $6,116.52, were for one month's coverage and the third for $5,963.94 was for two months' coverage. All the payments were for coverage that Associated had already provided to Excello and included payment of finance charges due to the delinquency. Associated responded to Excello's complaint by filing a motion for summary judgment which contended that the payments were made in the ordinary course of business and therefore not recoverable as preferential transfers under 11 U.S.C. § 547(c)(2). The bankruptcy court granted Associated's motion for summary judgment with respect to the first two payments but denied its motion as to the third payment, concluding that an issue of material fact existed regarding whether that payment for two-months' coverage was made in the ordinary course of business. On a second motion for summary judgment filed after this Court's opinion in Bonded Financial Services, Inc. v. European American Bank, 838 F.2d 890 (7th Cir.1988), Associated argued that it was not a transferee under 11 U.S.C. § 550 and was therefore not liable to Excello. The bankruptcy court accepted Associated's argument and dismissed the remainder of Excello's case. Thereafter Associated moved for the imposition of sanctions against Zazove under Bankruptcy Rule 9011 (n. 1 infra ).
Bankruptcy Judge Thomas James sanctioned Zazove in the amount of $11,916.52 for 1) filing the claim regarding the first two payments without adequate investigation and 2) failing to dismiss the claim regarding the third payment after Zazove learned of this Circuit's decision in Bonded Financial Services, supra. 104 B.R. 924. District Judge Suzanne B. Conlon affirmed the entry of sanctions against Zazove for "inadequate pre-filing investigation as to the first two payments," but reversed the entry of sanctions with respect to Excello's failure to dismiss the complaint since she concluded that Rule 9011 does not impose post-filing duties (App. 00017-00030) 120 B.R. 938. The district court remanded the case to the bankruptcy court to reduce the award of sanctions that had been imposed for failing to withdraw Excello's complaint. Both Zazove and Associated agree that to implement the district court's judgment, the bankruptcy court would merely subtract $1,500 from the original award of sanctions imposed by the bankruptcy judge.
On appeal, Zazove alleges that the district court erred in upholding sanctions against him for failing to conduct adequate pre-filing investigation. Associated does not cross-appeal from the district court's reversal of Rule 9011 sanctions against Zazove for failing to withdraw its claim; however, Associated now claims that this Court should impose such sanctions under 28 U.S.C. § 1927. This Court assumes jurisdiction under 28 U.S.C. § 158(d) and addresses the merits of these claims in turn.
28 U.S.C. § 158(d) provides for appeal from a final judgment issued by a district court pursuant to 28 U.S.C. § 158(a). In this case, the district court's judgment is final even though that judgment remanded a matter to the bankruptcy court. As stated in In re Fox, 762 F.2d 54 (7th Cir.1985), "[a]lthough a district judge's decision remanding a case to a bankruptcy judge normally is not final for purposes of appeal, it is final for those purposes if all that remains to do on remand is a purely mechanical, computational, or in short 'ministerial' task, whose performance is unlikely either to generate a new appeal or to affect the issue that the disappointed party was to raise on appeal from the order of remand." Id. at 55. In this case, the district judge remanded the case to the bankruptcy judge for performance of what the parties agree is a ministerial task--subtraction of $1,500 from the original award (see App. 00030). Because the issue remanded was ministerial, under In re Fox the district court's judgment is final and appealable under 28 U.S.C. § 158(d).
B. Discussion of Bankruptcy Rule 9011
Rule 9011 of the Federal Rules of Bankruptcy Procedure, analogous to Rule 11 of the Federal Rules of Civil Procedure, provides that an attorney's signature on a filed document certifies, among other things, that "to the best of the attorney's or party's knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law."1 In Zazove's case, the bankruptcy judge imposed sanctions on the ground that Zazove had failed to make a reasonable pre-filing inquiry into the law and the facts even though the bankruptcy judge considered that Zazove's complaint for Excello was