Opinion ID: 769369
Heading Depth: 2
Heading Rank: 2

Heading: Appeal to the District Court and Imposition of Sanctions

Text: 8 On May 4, 1999, the Debtor, still represented by Papapanayotou, appealed the Bankruptcy Court's April 26, 1999 order denying the Debtor's motion to vacate the sale. In his opening brief to the District Court, Papapanayotou disparaged and made unsubstantiated allegations that the Bankruptcy Court and the Trustee were engaged in civil and criminal misconduct. In particular, Papapanayotou accused the Bankruptcy Court of collusion with the Trustee and alleged that the Trustee had the helping hand of an approvingly winking Bankruptcy Court, Trustee's Counter Appendix on Appeal (App.), at 477; that the Bankruptcy Court conducted itself in a manner of impermissible advocacy of a litigant's cause by a Court of Law, App. at 479; that the Bankruptcy Court applied double standards, App. at 486; that its decision was utterly absurd, id., and transcends the bounds of an ordinary error, as evincing [] fundamental ignorance, App. at 488; and that the sale at issue was a judicially sanctioned grand larceny, App. at 489 (emphasis omitted). He also accused the Trustee of fraud, deceit and misrepresentation, App. at 477. In his reply brief to the District Court, he wrote, among other things, that the Trustee and Dorlexa engaged in a judicially sanctioned fraud, App. at 627; that as a matter of record, the cynicism and arrogance of the crooks staffing [Dorlexa's] management ranks has no bounds, App. at 630; that the Trustee committed defalcation and malfeasance, App. at 636; that the Trustee is an idiot, who pocketed the purchase price of the Judgments, App. at 637; and that the Trustee and Dorlexa are thieves and liars acting in concert with thieves and liars under the approving nod of a sympathetic court, id. 9 The District Court affirmed the Bankruptcy Court's decision, and dismissed the Debtor's appeal as frivolous. In addition, the District Court, sua sponte, awarded sanctions against Papapanayotou pursuant to 28 U.S.C. § 1927 for maintain[ing] this appeal in bad faith for the purpose of multiplying the proceedings in the case unreasonably and vexatiously, and for making spurious allegations of criminality in his brief against the Bankruptcy Judge and the Trustee. 60 East 80th Street Equities, Inc. v. Sapir, No. 99 Civ. 4388 (S.D.N.Y. July 30, 1999). Before imposing the sanctions, the court asked Papapanayotou [W]hy this Court should not conclude that your activities here in bringing this appeal and in making these allegations of dishonesty and idiocy which you've made in your papers submitted here should not come within a finding that you have unreasonably and vexatiously multiplied the proceedings of the case within the standard of Section 1927 of Title 28, United States Code. App. at 655. And, again, the court asked, [E]xplain to me why you shouldn't be required to answer for the excessive costs, expenses and attorneys' fees reasonably incurred because of such conduct, because I think that's what you did. Id. The District Court also questioned Papapanayotou specifically about some of the aforementioned statements he had made about the Trustee and the Bankruptcy Court in his briefs, and expressed disbelief and outrage that a member of the bar would make such statements. 10 Papapanayotou's response to the District Court was to state that his actions were within the bounds of permissible adversarial advocacy, App. at 642, and that his appeal was not only meritorious, but, in fact, indefensible [sic], App. at 657. He spoke at length of his view of the merits of the case, making conclusory statements that the Trustee had not attempted to collect the Judgments; that Papapanayotou had acted in good faith; that he did not run [up] any bill for the estate; that the authority cited in [his] brief speaks for itself; and that whatever he did had the solid premise both in fact and at law. App. at 658. When the District Court asked Papapanayotou to explain how any of his arguments make the Trustee an idiot, he had no response. See, e.g., App. at 656. Papapanayotou also apologized for the inconvenience that he had caused the court. App. at 658. The court stated, This isn't a case of inconvenience to me, it's a disgrace to you and the profession. Id. At no time did Papapanayotou ask for additional time to respond to the District Court's inquiries. In fact, at the end of his colloquy, Papapanayotou declared, I have concluded your Honor, in response to your invitation to explain my actions. Id. 11 After this exchange, the District Court concluded that within the meaning of Title 28, United States Code, Section 1927, the attorney of record on this appeal multiplied the proceedings of this case unreasonably and vexatiously and . . . he should be required to [pay the] excess costs and expenses, and that [t]he reasons and excuses given for what was done and for the way in which it was done and for the harsh invective employed in doing so are inadequate in this Court's judgment. App. at 660-61. A judgment dated July 30, 1999 was entered dismissing the appeal as frivolous and sanctioning Papapanayotou $5,000 pursuant to § 1927. The District Court chose $5,000 as the amount of the sanction because it was half of what the Trustee estimated as the cost of responding to the appeal from the Bankruptcy Court's decision. As of the date of the filing of this opinion, that sanction had not yet been paid.