Court Opinion

ID: 9482743
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:59:26.814246+00
Date Added: 2024-06-11T17:49:10.941717
License: Public Domain

ALARCON, Circuit Judge,
dissenting.
I would deny Susan Brewer’s request for attorney’s fees in this matter. Brewer seeks attorney’s fees pursuant to Rule 38 of the Federal Rules of Appellate Procedure. Rule 38 provides that attorney’s fees may be awarded if an appeal is frivolous. I respectfully disagree with my colleagues’ conclusion that the appeal from the district court’s reversal of the bankruptcy court’s judgment, filed by Erwin & Erwin, P.C. (the Erwin law firm) was frivolous.
In this matter, the bankruptcy judge ruled in favor of the Erwin law firm. The appeal from the bankruptcy court’s ruling was taken by Brewer, not the Erwin law firm. In our independent review of the bankruptcy court’s judgment in favor of the Erwin law firm, we held that the bankruptcy court erred as a matter of law in concluding that Charles Erwin was not an insider. In re Marquam Inv. Corp., 942 F.2d 1462, 1465-66 (9th Cir.1991).
Punishment of the party that prevailed in the trial court under Rule 38 for seeking to uphold a favorable judgment appears to be a bizarre application of a rule designed to discourage frivolous appeals by the party that lost in the trial court. The majority has not cited any case wherein an appellate court has awarded sanctions in a bankruptcy matter against the party that prevailed in the trial court. In McConnell v. Critchlow, 661 F.2d 116 (9th Cir.1981), the only authority cited by the majority, we imposed sanctions against a party that filed an appeal from the dismissal by the district court of a civil rights action based on arrests that took place 4 to 15 years before the filing of his complaint. We concluded that the appeal was frivolous because “McConnell made no argument on appeal as to why the limitations period had not run.” Id. at 117. In this matter, the Erwin law firm vigorously, albeit erroneously, contested the district court’s reversal of the judgment of the bankruptcy court.
The reversal of the bankruptcy court’s judgment by the district court simply demonstrated that two judges disagreed in their interpretation of the law regarding an insider’s duties, not that either party’s legal arguments were frivolous. The Erwin law firm had the right to seek review of the district court’s reversal of the bank*802ruptcy judge’s judgment upholding the claim for legal fees. Failure to do so in light of the bankruptcy judge’s favorable decision may have bordered on malpractice. I cannot concur in the majority’s conclusion that the Erwin law firm’s decision to have this court resolve this conflict between the two courts was frivolous.
This court has the duty to review a bankruptcy court’s decision de novo without deference to the district court’s legal conclusions. In re Marquam Inv. Corp., 942 F.2d at 1465. In the Marquam decision, we described our role in reviewing a bankruptcy court’s decision as follows:
[W]e are in reality reviewing the claims of error presented by the party that did not prevail before the bankruptcy court. While Brewer is nominally the appellee before this court, it is her challenge to the bankruptcy court’s findings and conclusions of law that we must review. By the same token, although designated as the appellant, the Erwin law firm’s mission before this court is to defend the victory it achieved in the bankruptcy court. '

Id.

The effect of the majority’s conclusion to award attorney’s fees in favor of the party that lost before the bankruptcy court is that a party that seeks to sustain a bankruptcy judge’s judgment risks incurring sanctions if this court disagrees with the bankruptcy court’s interpretation of the law. I seriously doubt that the drafters of Rule 38 intended to sanction a party that prevailed in the bankruptcy court whenever we conclude that the bankruptcy court erred.