Opinion ID: 78403
Heading Depth: 3
Heading Rank: 4

Heading: Improper Purpose/Bad Faith

Text: On appeal, Ginsberg alleges that the filing of the Motion was not sanctionable; it was well justified in fact and law and was brought for a proper purpose. In our view, a court could reasonably conclude that the content, timing, and tone of the Recusal Motion indicate bad faith.
In this case, the bankruptcy court sanctioned Ginsberg under Federal Rule of Bankruptcy Procedure 9011, the court's inherent sanctioning powers, and 11 U.S.C. § 105. On appeal to the district court, Ginsberg argued that the Sanctions Motion violated Rule 9011's twenty-one-day safe harbor provision. [13] The district court found that it was not necessary to decide whether the safe harbor provision was violated because the sanctions imposed were clearly valid under 11 U.S.C. § 105. In re Evergreen, 391 B.R. at 188. We agree. Under Section 105(a) the court may take any action necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process. 11 U.S.C. § 105(a). Thus, a court may impose sanctions if a party violates a court order or rule. See, e.g., Jove Eng'g, Inc. v. I.R.S., 92 F.3d 1539, 1542 (11th Cir.1996) (awarding sanctions under Section 105(a) for a violation of an automatic stay provision). Sanctions were also imposed under the bankruptcy court's inherent power which is similarly not affected by the safe harbor provision of Rule 9011. To impose sanctions under the court's inherent power, the court must find bad faith. In re Walker, 532 F.3d at 1309. A finding of bad faith is warranted where an attorney knowingly or recklessly raises a frivolous argument, or argues a meritorious claim for the purpose of harassing an opponent. A party also demonstrates bad faith by delaying or disrupting the litigation or hampering enforcement of a court order. ( Id. ) (internal citations omitted). If particularly egregious, the pursuit of a claim without reasonable inquiry into the underlying facts can be the basis for a finding of bad faith. Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir.1998); see also Jones v. Int'l Riding Helmets, Ltd., 49 F.3d 692, 695-96 (11th Cir.1995) (finding that a court must determine whether a reasonable inquiry was conducted prior to the filing of a pleading); In the Matter of Med. One, Inc., 68 B.R. 150, 152 (Bankr. M.D.Fla.1986) (finding that failure to make a reasonable inquiry into whether a filing alleged valid claims was sanctionable). Further, continually advancing groundless and patently frivolous litigation is tantamount to bad faith. Glass, 849 F.2d at 1265.
The bankruptcy court was fully justified in finding that the Recusal Motion was filed and litigated as an offensive litigation strategy. (Sanctions Order at 68.) Challenges to adverse rulings are generally grounds for appeal, not recusal. In re Walker, 532 F.3d at 1311; see also Bolin v. Story, 225 F.3d 1234, 1239 (11th Cir.2000) ([E]xcept where pervasive bias is shown, a judge's rulings in the same or a related case are not a sufficient basis for recusal.). Nevertheless, a considerable portion of the Recusal Motion disputed rulings unfavorable to the debtors. [14] ( See, e.g., Recusal Mot. at 2) (referring to a series of dubious judicial actions taken in conjunction with Mr. Shuker.). The Recusal Motion criticizes the court for appointing an interim trustee; [15] not sufficiently addressing the automatic stay; [16] granting the discovery order; [17] making incorrect FOFCOL in the Mataeka AP judgment; [18] and miscalculating the damages award in the Mataeka AP judgment. [19] Spradley even conceded in testimony that he was really frustrated at that point, the fact that I felt relief was coming down in favor of the plaintiff and against the defendants in the case and in a fashion that didn't appear to be just. (Recusal Tr. Vol. III at 146.) Yet, a recusal motion is an improper vehicle to dispute disagreeable adverse rulings. It is a clear abuse of such a pleading. Additionally, Ginsberg requested the revocation of all orders previously entered in the Mataeka AP and related proceedings. In other words, Ginsberg sought the revocation of more than 250 orders all previously entered in the Evergreen case. Yet, Ginsberg presented no evidence that this was an extraordinary circumstance which required vacatur. Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863, 108 S.Ct. 2194, 100 L.Ed.2d 855 (1988) (noting that vacatur should only be applied in extraordinary circumstances (citation omitted)). In our view, requesting this kind of relief, while discussing numerous rulings adverse to the debtors, strongly suggests that the Motion was presented to hamper enforcement of the bankruptcy court's orders.
The bankruptcy court also did not err in concluding that Ginsberg filed the Recusal Motion to postpone the involuntary bankruptcy proceedings against his client and the appeal from the Mataeka AP Judgment. Filing the Recusal Motion frustrated Evergreen's collection efforts on an almost $8 million judgment. The Recusal Motion was filed the day after Evergreen finished its prima facie case on the involuntary bankruptcy proceedings and it apparently was clear to all concerned that Evergreen was going to prevail. The Motion was not filed until July 26th even though many of the incidents outlined in the Motion happened much earlier. [20] Ginsberg further petitioned the district court to stay all related proceedings. Ginsberg also continually stalled the Recusal hearing. Two days before the scheduled pre-hearing conference, he sought a stay of the proceedings pending the resolution of his Petition for a Writ of Mandamus. Ginsberg then postponed the final evidentiary hearing for one month due to his availability constraints and those of his expert witness. Days before the trial, Ginsberg again sought to continue the trial for two weeks in order to properly prepare for the depositions of the witnesses and to properly prepare for the final evidentiary hearing. (Recusal Order at 14.) Finally, at the evidentiary hearing, after both parties finished presenting their cases in chief, Ginsberg asked for a continuance to present his rebuttal case. The evidentiary hearing was continued almost two months, at which time Ginsberg sent a letter to the court saying he did not intend on presenting a rebuttal case. Moreover, the record shows Ginsberg tried to delay the filing of an appeal. After filing the Recusal Motion, Ginsberg filed a motion for extension of time to appeal the Mataeka AP Judgment. The district court found that the stated reasons for wanting to put off filing an initial brief have varied with each filing seeking delay. Taken as a whole, the record is cause for concern. (D. Ct. Case 06-cv-00837-JA, D.E. # 43.) These delaying tactics further support the bankruptcy court's finding of Ginsberg's bad faith.
Finally, the bankruptcy court did not err in finding that Ginsberg's overzealous litigation tactics, use of factual inaccuracies, and disrespectful behavior demonstrate bad faith. Quoting Blackstone, the United States Supreme Court explained that the law will not suppose a possibility of bias or favour in a judge, who is already sworn to administer impartial justice, and whose authority greatly depends upon that presumption and idea. Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 820, 106 S.Ct. 1580, 89 L.Ed.2d 823 (1986) (quoting 3 W. Blackstone, Commentaries at ). That does not mean that a judge should never disqualify himself for personal bias or prejudice, but it should not be supposed. And as to counsel, as the Ohio Supreme Court has put it, [t]he law demands that all counsel foster respect and dignity for those who administer and enforce the law. Conduct that is degrading and disrespectful to judges and fellow attorneys is neither zealous advocacy nor a legitimate trial tactic. Lying to a tribunal and making false accusations against judges and fellow attorneys can never be condoned. Columbus Bar Assn. v. Vogel, 117 Ohio St.3d 108, 881 N.E.2d 1244, 1249 (2008). Yet, the record shows Ginsberg indulged in disrespectful statements without legal or factual foundation. Ginsberg ignored all facts indicating that the court did not direct or engage in ex parte communications, rely on extra judicial materials, or endorse Shuker's actions. Ginsberg knew about Judge Jenneman's order, yet Ginsberg did not even mention that Judge Jenneman had held that the ex parte hearing was not improper. Instead of engaging in a reasonable fact finding investigation before making allegations, Ginsberg supposed bias and favor in all of Judge Briskman's actions. For example, because the court did not denounce Shuker's 46-page FOFCOL, Ginsberg claimed the oversized filing was intentional: One can only reasonably conclude that neither the Court nor Mr. Shuker had any intention of Mr. Shuker being limited to filing the proposed findings within the page limit demanded of the Movants. (Recusal Mot. at 27) (emphasis added). Ginsberg also assumed the court relied on the 46-page FOFCOL even though there was evidence to the contrary. Further, the Recusal Motion compared Judge Briskman's conduct to criminal judicial misconduct even though Ginsberg had no actual, personal knowledge of the Complaint and no reason to believe that it alleged criminal misconduct. Indeed, Ginsberg did not speak directly to Hudson about the Complaint before calling it an investigation or try to contact any of the other people present at the relevant ATN proceeding. Ginsberg also testified that he was advised by his expert witness Justice Harding that he had an ethical obligation to see this through to convince the court that Ginsberg did not file the Recusal Motion for tactical purposes. (Sanctions Tr. Vol. I at 90-91.) However, the record refutes this contention. The record shows that Harding did not advise Ginsberg to file the Recusal Motion, as Harding was not engaged by GrayRobinson until after the Recusal Motion was filed. Justice Harding was also not given all of the evidence to develop his expert opinion. For example, Justice Harding was never told that Evergreen filed a subsequent 15-page FOFCOL, he was not shown the emails between Shuker and Spradley discussing whether the court had considered the 46-page submission, nor was he given the 15-page FOFCOL to compare with the court's ultimate FOFCOL. (Sanctions Tr. Vol. I at 54-57.) Moreover, Ginsberg failed to re-evaluate his accusations after the evidentiary hearing on the Recusal Motion. Ginsberg repeated his claim of court-ordered ex parte filings even after the recusal hearing revealed no evidence of such a directive. Ginsberg continued to assert that Judge Briskman relied on the 46-page FOFCOL even though there were emails referencing the discussions of Spradley and Shuker with the court's staff that the 46-page submission was not considered and all of the information in the ultimate FOFCOL could be found elsewhere. Additionally, Ginsberg continued to allege that the Judicial Council had launched an investigation into Judge Briskman's conduct even after he learned that Hudson would have been notified if an investigation was initiated. Further, after Knight testified that he merely overheard Shuker's threats of imprisonment, Ginsberg still continued to assert that Shuker approached Knight and Huggins and threatened them with imprisonment. Similarly, even after Knight testified that Huggins was in the bathroom at the time of Shuker's alleged threat, Ginsberg contended that Shuker told Huggins he would die in jail. The evidence produced at the hearing was sufficient for Spradley and GrayRobinson to pull out of the Recusal Motion. Yet, even with mounting evidence to the contrary, Ginsberg continued to argue the Recusal Motion. Further, Ginsberg was extremely difficult to deal with and disrespectful to the court. He refused to answer the court's questions, treated the court as an adversary and continually made inflammatory statements. For example, Ginsberg exaggerated the implications of Judge Briskman's actions, alleging that his conduct relates directly to the judicial processes, namely the integrity of trial transcripts, and a party's due process rights and liberty. (Recusal Mot. at 19.) Ginsberg opened the Recusal Hearing by claiming: Your honor has compromised my health, your Honor has compromised my immune system. (Recusal Tr. Vol. I at 5.) Ginsberg also used accusatory, unsupported language in the three petitions for writ of mandamus; asserted that Judge Briskman faced potential career ending punishment; and accused him of trying to surreptitiously brush the matter under the carpet so he could retain authority over these very important issues of judicial and professional conduct. (Response Br. at 16.) Ginsberg also purposefully pursued recusal very publicly. After learning of Hudson's Complaint, Ginsberg did not first request a private hearing with Judge Briskman and all counsel in these cases to address his concerns, nor did he file the Recusal Motion under seal (ignoring the preference for confidentiality inherent in the Judicial Council Rules discussed below). Instead, the first time Ginsberg raised the Complaint was in a 31-page accusatory motion which used the term investigation twelve times and referenced adverse rulings fifty-four times. Ginsberg also immediately brought the Recusal Motion to the attention of the district court. He filed three petitions for a writ of mandamus with the district court while the Recusal Motion was still pending. [21] In our view, Ginsberg's dogged pursuit of a frivolous claim indicates bad faith.