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

Heading: Motion For Sanctions Before This Court

Text: 28 The Trustee has filed a separate motion requesting sanctions from this Court under Federal Rule of Appellate Procedure 38. 4 Rule 38 provides, If a court of appeals shall determine that an appeal is frivolous, it may award just damages and single or double costs to the appellee. Fed. R. App. P. 38. Rule 38 sanctions may include the granting of reasonable attorneys' fees to the party forced to defend the frivolous appeal. Rodriguez Alvarez v. Bahama Cruise Line, Inc., 898 F.2d 312, 318 (2d Cir. 1990) (awarding opposing counsel attorneys' fees and costs on appeal based on lack of merit in appeal, intransigence in responding to plaintiff's claims, and conclusion that appeal was launched solely for harassment value). 29 The applicable standard for imposition of Rule 38 sanctions in this Circuit is slightly unclear. In several instances we have stated that Rule 38, like § 1927, requires a showing that the appeal is frivolous as well as a clear showing of bad faith. In re Hartford Textile Corp., 659 F.2d 299, 305 (2d Cir. 1981) (per curiam), cert. denied, 455 U.S. 1018 (1982); see also Hirschfeld v. Spanakos, 104 F.3d 16, 20 (2d Cir. 1997) (The standard for sanctioning a party for bringing an appeal or motion is whether the sanctioned party acted in bad faith, vexatiously, wantonly, etc.); Schiff v. United States, 919 F.2d 830, 834 (2d Cir. 1990) (per curiam) (concluding that the situation before the Court is one of those highly unusual instances which permit the imposition of sanctions under Rule 38 because of a clear showing of bad faith) (internal quotation marks omitted), cert. denied, 501 U.S. 1238 (1991). We have at other times also stated that a showing of bad faith is not required for an imposition of sanctions under Rule 38. See In Re Drexel Burnham Lambert Group, Inc., 995 F.2d 1138, 1147 (2d Cir. 1993) (The standard for the imposition of [sanctions under Rule 38] is where the appeal taken is found to be groundless, without foundation, and without merit, even though appellant did not bring it in bad faith.); S.R. Mercantile Corp. v. Maloney, 909 F.2d 79, 82-83 (2d Cir. 1990) (regarding the Tenth Circuit's articulation in Braley v. Campbell, 832 F.2d 1504, 1512 (10th Cir. 1987), as defining the standard for imposition of sanctions on an attorney under Rule 38, which requires only reckless disregard of the attorney's duties to the court). In addition, the Sixth Circuit has recently noted that a split exists among the circuits as to whether bad faith or intentional misconduct is a requirement for Rule 38 sanctions, although it noted that the majority of circuits have not imposed such a requirement. See Wilton Corp. v. Ashland Castings Corp., 188 F.3d 670, 676-77 (6th Cir. 1999) (collecting cases and deciding that the Sixth Circuit does not require a showing of bad faith). We do not find it necessary to choose between these standards in deciding whether to impose sanctions under Rule 38, because Papapanayotou's conduct on appeal rises even to the level of bad faith. 30 Because the Debtor has withdrawn the underlying appeal challenging the Trustee's sale of the estate assets, the only issue remaining before this Court is the propriety of the District Court's imposition of sanctions upon Papapanayotou pursuant to § 1927. Thus, our decision to impose sanctions upon Papapanayotou in this Court pursuant to Rule 38 turns solely on whether his appeal of the District Court's imposition of sanctions upon him has been conducted in a frivolous manner and in bad faith. 31 First, we conclude that Papapanayotou's persistence in appealing the District Court's sanctions, together with the nature of his arguments, is clearly frivolous. As described above, it is clear that the District Court properly found that Papapanayotou acted with improper purpose in appealing the Bankruptcy Court's decision, and that the District Court was well-within its discretion in deciding that the requisite standard for imposition of sanctions under § 1927 had been met. The only question, with any arguable merit whatsoever on appeal before this Court, therefore, is whether Papapanayotou was given adequate due process in connection with the imposition of sanctions by the District Court. As we have explained above, we conclude that the due process was adequate. The remainder of Papapanayotou's appeal consists almost solely of the same meritless arguments raised before the Bankruptcy Court and the District Court, namely, that the Debtor should have been given notice of the sale, and that the sale was a violation of the Trustee's fiduciary duty. Thus, we have no hesitation in deciding that Papapanayotou's arguments on appeal-as he was previously warned by the two courts below-are frivolous. 32 Second, Papapanayotou's bad faith is evident, again, in the nature of his arguments to this Court. He continues in his briefs to this Court to launch the same outrageous and groundless personal attacks upon the Bankruptcy Judge, Trustee, and now also the District Court. When asked at oral argument to explain his conduct, Papapanayotou claimed only that section 1927 does not say anything about intemperate language, and that he stands by his statements in his papers. 33 Also relevant to our inquiry is the fact that Papapanayotou's behavior is repetitive. He has been sanctioned once before in the Southern District of New York, see In re M.A.S. 284 Parking Corp., No. 97 Civ. 6035, 1998 WL 526433 (S.D.N.Y. Aug. 20, 1998), aff'd, No. 99-5042, 1999 WL 1295816 (2d Cir. Dec. 23, 1999), and his conduct in that case mirrors his conduct here: he was sanctioned in the district court for filing a frivolous appeal of the bankruptcy court's decision, using intemperate language, and making baseless fraud and collusion accusations against the bankruptcy judge, which he continued in his brief on appeal to this Court. For example, he called the bankruptcy judge a bigot donning the judicial garb of a bankruptcy judge openly assuming the role of an advocate of Defendants' cause. Affidavit of Joshua J. Angel in Support of Trustee's Motion for Sanctions, Ex. H at 41. 34 Thus, we conclude that the frivolous arguments pursued on appeal of the District Court's imposition of sanctions, together with the repetitive bad faith in this case, and against the background of his questionable conduct in another case, warrant imposition of sanctions pursuant to Rule 38. 5 See, e.g., Moore v. Time, Inc., 180 F.3d 463, 463-64 (2d Cir.) (per curiam) (granting motion for sanctions against a pro se plaintiff for pursuing an appeal despite a magistrate judge's strong admonition that his complaint presented no non-frivolous claims, the fact that his appellate brief had no merit to it, and [p]articularly in light of the fact that this is not the first frivolous appeal Moore has brought to this court), cert. denied, 120 S. Ct. 331 (1999); Knipe, 999 F.2d at 710-11 (sua sponte ordering counsel for appellants to show cause why Rule 38 sanctions should not be imposed where the argument was entirely frivolous and appellant alleged to the Court that the district court judge acted as an advocate).