Court Opinion

ID: 2994237
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:13:34.414892+00
Date Added: 2024-06-11T11:45:20.505535
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

Nos. 99-1625 and 99-1636

In re:    Rimsat, Limited,

Debtor,

Appeals of:    Kauthar Sdn Bhd, et al.

Appeals from the United States District Court
for the Northern District of Indiana, Fort Wayne Division.
Nos. 1:98cv363 and 1:98cv370--William C. Lee, Chief Judge.

Argued February 22, 2000--Decided May 18, 2000

      Before Coffey, Easterbrook, and Williams, Circuit
Judges.

      Williams, Circuit Judge. Kauthar Sdn Bhd and
three of its former attorneys, Daniel Voelker,
William Howard, and William Factor, seek review
of a bankruptcy court order sanctioning them for
improper conduct during a bankruptcy proceeding.
For various reasons, the appellants contend that
the sanctions order must be reversed. Because the
bankruptcy court committed no reversible error in
sanctioning the appellants, however, we affirm.

I

      Kauthar Sdn Bhd is a Malaysian entity that
invested a substantial sum of money in Rimsat,
Ltd., a firm that planned to provide satellite
service to the Pacific Rim using satellite rights
allotted to the island nation of Tonga and
controlled by Tongasat, a Tongan company.
However, Rimsat ran into financial trouble and
filed for bankruptcy. Tongasat and Rimsat
attempted to settle their claims against each
other on two occasions, but Kauthar objected to
both of the proposed compromises contending that
Tongasat was being let off too easy, to the
detriment of Kauthar’s investment in Rimsat. In
contesting the Tongasat/Rimsat compromises,
Kauthar’s attorneys pursued an aggressive
litigation strategy to force a more favorable
settlement plan. Their strategy earned them at
least one warning from the bankruptcy judge about
unnecessary and purely strategic litigiousness
before the events leading up to the bankruptcy
judge’s ultimate decision to sanction them.

      In challenging the second proposed
Tongasat/Rimsat compromise, Kauthar sought to
depose a number of individuals associated with
Tongasat, including the Princess of Tonga, who
chaired Tongasat’s Board of Directors, and Edward
Lau, Tongasat’s outside general counsel and its
deposition designee. Tongasat filed a motion for
a protective order and the bankruptcy court held
a hearing on the matter. At the hearing, the
bankruptcy judge expressed concern that Kauthar’s
discovery requests had gone beyond the limited
scope relevant to the compromise and ruled that
Kauthar could only depose one person from
Tongasat. William Factor, who represented Kauthar
at the hearing, informed the court that Kauthar
would choose to depose the Princess. Tongasat
objected on the ground that the Princess lacked
personal knowledge regarding the disputed issues.
With the understanding that the Princess would
submit an affidavit attesting to her lack of
personal knowledge, the bankruptcy judge ruled
that Kauthar would have to depose someone else,
and on Kauthar’s behalf, Factor selected Edward
Lau. Kauthar’s attorneys then filed a motion to
compel the deposition of the Princess asserting
that the Princess had personal knowledge of
disputed issues.

      Meanwhile, Daniel Voelker and William Howard
represented Kauthar at Lau’s deposition. Voelker,
who conducted the deposition, focused his
inquires on whether Lau believed he could
disclose information he had acquired from the
Princess. Dissatisfied with Lau’s refusal to
answer yes or no in general to these inquires,
Voelker began to argue with and ask harassing
questions of Lau. For instance, at one point, he
asked Lau, "In the conversation you had in August
of 1995, what did the Princess say to you, and
what did you say to her? I want to know
everything she said to you, Mr. Lau, every single
word she uttered?" Voelker then began to bicker
with Lau and Lau’s counsel, implying that Lau
intended to be dishonest in answering and
intended to improperly invoke attorney-client
privilege when he asked, "Are you going to answer
[my question] fully and completely and honestly,
or are you going to selectively answer the
question and assert in your own mind, Mr. Lau,
the attorney-client privilege?" Unable to get the
answers he wanted regarding Lau’s ability to
disclose information acquired from the Princess
and claiming that Lau was not a proper deposition
designee, Voelker terminated the deposition
without asking a single question regarding the
proposed Tongasat/Rimsat compromise.

      Afterwards, Tongasat filed a motion for
sanctions based on the deposition. The motion
alleged that Kauthar’s attorneys never had any
intention to depose Lau and intentionally
sabotaged the Lau deposition. The motion sought
attorneys’ fees and other costs associated with
the deposition.

      When the parties next came before the
bankruptcy judge, the judge informed "Kauthar’s
counsel" that he was disturbed by the deposition
and, in light of their previous conduct in the
litigation, he was seriously considering not only
imposing a monetary sanction but also revoking
their pro hac vice status./1 Kauthar’s counsel
filed a response to Tongasat’s sanctions motion
contending that their conduct was entirely
reasonable. Tongasat then filed a reply disputing
the contentions of Kauthar’s counsel and
requesting, among other additional sanctions,
that the pro hac vice status granted Kauthar’s
counsel be revoked.

      Approximately eleven months after receiving
Tongasat’s reply, and thirteen months after
approving the proposed Tongasat/Rimsat
compromise, the bankruptcy court ruled on the
sanctions motion. It concluded that in light of
the conduct of Kauthar’s counsel throughout the
litigation and the behavior of their counsel at
the Lau deposition, there could be no doubt that
Kauthar’s counsel never had any intention of
seeking relevant information from Lau, but rather
sought only to increase the cost and
inconvenience of the litigation and delay the
then-imminent hearing regarding the
Tongasat/Rimsat compromise. Pursuant to its
authority to impose sanctions under 11 U.S.C.
sec. 105(a) and the inherent powers doctrine, the
bankruptcy court ordered Kauthar and its
attorneys to pay $10,890.81 in costs associated
with the Lau deposition and revoked Voelker’s,
Howard’s, and Factor’s pro hac vice status.
Kauthar and its attorneys appealed to the
district court, but the district court affirmed
the sanctions order. Now Kauthar and its
attorneys appeal to this court,/2 contending
that they were denied due process when the
bankruptcy court sanctioned them, that the
bankruptcy court abused its discretion in
sanctioning them, and that the sanctions order
against them must be vacated because the
bankruptcy court waited too long to issue it./3

II

      Before we consider the appellants’ challenges to
the bankruptcy court’s sanctions order, we must
determine whether we have jurisdiction over the
present appeal. The general rule is that a court
of appeals has jurisdiction over a bankruptcy
appeal only if the bankruptcy court’s original
order and the district court’s order reviewing
the bankruptcy court’s original order are both
final. 28 U.S.C. sec. 158(d); In re Devlieg,
Inc., 56 F.3d 32, 33 (7th Cir. 1995) (per
curiam); In re Morse Elec. Co., 805 F.2d 262, 264
(7th Cir. 1986); 16 Charles Alan Wright, Arthur
R. Miller, & Edward H. Cooper, Federal Practice
and Procedure sec. 3926.2, at 273 (2d ed. 1996).
In the bankruptcy context, however, finality does
not require a final order concluding the entire
bankruptcy proceeding; certain orders entered
prior to the conclusion of the bankruptcy
proceeding will be deemed final. In re Forty-
Eight Insulations, Inc., 115 F.3d 1294, 1298-99
(7th Cir. 1997); In re Official Committee of
Unsecured Creditors of White Farm Equip. Co., 943
F.2d 752, 754-55 (7th Cir. 1991). Where an order
terminates a discrete dispute that, but for the
bankruptcy, would be a stand-alone suit by or
against the trustee, the order will be considered
final and appealable. In re Szekely, 936 F.2d
897, 899-900 (7th Cir. 1991); Wright, Miller, &
Cooper, supra, sec. 3926.2, at 272-73.

      Dicta in In re Wade, 991 F.2d 402, 406 (7th
Cir. 1993), suggests that sanctions orders fall
into this category, but it is unclear whether
such a position can be maintained in the wake of
Cunningham v. Hamilton County, Ohio, 119 S. Ct.
1915 (1999), which holds that sanctions orders
are not automatically appealable prior to final
judgment, at least in the non-bankruptcy context.
Even if it was not final at the time it was
issued, we are persuaded that the bankruptcy
court’s sanctions order has since become final.
Kauthar’s claims against the bankruptcy estate
have been valued and accepted, and the final
distribution of the bankruptcy estate’s claims
has been approved. Because Kauthar’s dispute with
the bankruptcy estate has been resolved, orders
relating to Kauthar’s participation in the
bankruptcy proceeding are now final. White Farm
Equip., 943 F.2d at 755; Szekely, 936 F.2d at
899-900; see also Forty-Eight Insulations, 115
F.3d at 1298-99. That this finality arose after
the present appeals were filed is no barrier to
jurisdiction, as the doctrine of cumulative
finality allows an appeal from a non-final order
to be "saved" by subsequent events that establish
finality. See In re Emerson Radio Corp., 52 F.3d
50, 52 (3d Cir. 1995); In re Interwest Bus.
Equip., Inc., 23 F.3d 311, 314-15 (10th Cir.
1994); Wright, Miller, & Cooper, supra, sec.
3926.2, at 290. Therefore, and since there is no
reason to doubt the finality of the district
court’s order simply affirming the bankruptcy
court’s order, our jurisdiction over this appeal
is secure. We now turn to the challenges the
appellants raise to the bankruptcy court’s
sanctions order.

III

A.    Due Process

       The appellants first challenge the bankruptcy
court’s sanctions order on constitutional
grounds. They contend that the bankruptcy court
failed to afford them the fair notice and
opportunity to be heard that the Fifth
Amendment’s due process clause requires a court
to provide before imposing sanctions. See In re
Hancock, 192 F.3d 1083, 1086 (7th Cir. 1999);
Larsen v. City of Beloit, 130 F.3d 1278, 1286-87
(7th Cir. 1997). As the appellants’ due process
challenge raises issues of law, our review is
plenary. Martin v. Brown, 63 F.3d 1252, 1262 (3d
Cir. 1995); Kirkland v. National Mortgage
Network, Inc., 884 F.2d 1367, 1370 (11th Cir.
1989). Cf. United States v. Kirschenbaum, 156
F.3d 784, 792 (7th Cir. 1998) (noting that, in
general, due process claims are reviewed de
novo).

      The appellants first complain that they received
inadequate notice that they were possible
subjects of sanctions. The bankruptcy court’s
practice of referring to them collectively as
"Kauthar’s counsel," they contend, did not
sufficiently put them on notice. Fair notice can
come from the court or an opposing litigant,
Hancock, 192 F.3d at 1086 (notice from the
court); Schlaifer Nance & Co. v. Estate of
Warhol, 194 F.3d 323, 334 (2d Cir. 1999) (notice
from opposing party); Martin, 63 F.3d at 1263
(notice from opposing party), but it must, among
other things, inform the person that he or she is
in jeopardy of being sanctioned by the court.
Hancock, 192 F.3d at 1086; Larsen, 130 F.3d at
1286-87.

      Voelker and Howard have no grounds for
contending that they did not receive adequate
notice. They are specifically mentioned in
Kauthar’s motion for sanctions, and they were the
ones who conducted the Lau deposition. That their
conduct at the Lau deposition might be the basis
for sanctions could hardly have been more plain.
Consequently, we conclude that they received
adequate notice that they might be sanctioned.

      Factor tries to distinguish himself from Voelker
and Howard by pointing out that he was not
present at the Lau deposition and the bankruptcy
court’s reference to "Kauthar’s counsel" did not
put him on notice that he might be sanctioned
based on the deposition. The problem with this
argument is that Tongasat’s motion for sanctions
specifically asks the bankruptcy court to impose
sanctions against Kauthar’s attorneys based upon
"the notice of, argument for, and conduct of the
deposition of Edward Lau." Since Factor signed
the notice of deposition, Tongasat’s motion put
him on notice that his conduct might be the basis
for sanctions. Moreover, in detailing the
evidence of Kauthar’s counsels’ intent to harass
individuals associated with Tongasat, Tongasat’s
motion for sanctions specifically refers to an
argument Factor made regarding the possibility of
deposing the Princess. In light of these facts,
the practice of the bankruptcy court and Tongasat
to refer to Kauthar’s attorneys collectively,
rather than individually, should have put Factor
on notice that he was in jeopardy of being
sanctioned. Thus, Factor received adequate notice
that he might be sanctioned.

      The appellants next complain that they received
inadequate notice of precisely what conduct might
warrant sanctions. They contend that, although
the bankruptcy court based its sanctions decision
on the entire course of Kauthar’s counsels’
conduct with respect to the Tongasat/Rimsat
compromise, neither the bankruptcy court nor
Tongasat ever specifically identified particular
instances of misconduct, other than the events
surrounding the Lau deposition. And, a court may
not, consistent with due process, impose
sanctions based on particular conduct unless the
parties being sanctioned have received notice
(from the court or an opposing party) that that
conduct may be the basis for sanctions. Schlaifer
Nance, 194 F.3d at 334; Bonilla v. Volvo Car
Corp., 150 F.3d 88, 93 (1st Cir. 1998); Martin,
63 F.3d at 1263.

      In this case, however, we do not read the
bankruptcy court’s sanctions order as relying on
conduct, other than that related to the Lau
deposition, in a manner that gives rise to an
obligation to provide the kind of particularized
notice the appellants believe they were due. The
bankruptcy court merely referred to Kauthar’s
general litigation strategy as evidence to
support the court’s finding that the appellants
intentionally sabotaged the Lau deposition in an
effort to further delay the proceedings and
inconvenience Tongasat and to explain why
monetary sanctions alone would be insufficient to
deter similar future conduct. Moreover, the court
never referred to particular instances of conduct
outside the events surrounding the Lau
deposition; it referenced only Kauthar’s general
litigation strategy. As particular conduct, other
than that related to the Lau deposition, did not
actually form the basis for the sanctions
imposed, there is no reason to think that
Kauthar’s attorneys were entitled to the sort of
particularized notice they believe they were due.
When a court imposing sanctions simply cites
attorney conduct for the limited purpose of
providing context and background, particularized
notice is not required. In fact, demanding
particularized notice in such situations would
only discourage sanctioning courts from writing
the sort of comprehensive sanctions orders,
containing all of the relevant background
material, that are most helpful to reviewing
courts.

      To the extent that the appellants were entitled
to notice informing them that Kauthar’s general
litigation strategy might provide a background
against which Tongastat’s motion would be
evaluated, statements by the bankruptcy court and
in Tongasat’s sanctions motion referencing
Kauthar’s general litigation strategy with
respect to the Tongasat/Rimsat compromise
provided adequate notice. For instance, before
taking Tongasat’s motion for sanctions under
advisement, the bankruptcy judge spoke of the
context in which Tongasat’s motion would be
evaluated, "For a year [Kauthar’s counsel has]
apparently embarked upon what appears to be a
conscious effort to maximize litigation and, in
doing so, make certain that the litigation is as
time-consuming, difficult, unpleasant, and
expensive as humanly possible." The bankruptcy
court did not deny the appellants due process by
failing to ensure that they received adequate
notice of what conduct might subject them to
sanctions.

      Finally, the appellants complain that the
bankruptcy court deprived them of their due
process right to have an adequate opportunity to
be heard by not holding a hearing before imposing
sanctions. Providing an opportunity to be heard
includes giving an attorney against whom a court
is considering imposing sanctions the chance to
present his or her case at a meaningful time in
a meaningful manner, but a hearing is not
invariably required before sanctions may be
imposed. Hancock, 192 F.3d at 1086; Kapco Mfg.
Co. v. C & O Enters., Inc., 886 F.2d 1485, 1494-
95 (7th Cir. 1989); Schlaifer Nance, 194 F.3d at
335; Cook v. American S.S. Co., 134 F.3d 771,
774-76 (6th Cir. 1998). Putting to one side the
possibility that the appellants were not entitled
to a hearing in the first place, the problem with
the appellants’ argument that the bankruptcy
court should have held a hearing before imposing
sanctions is that the appellants never requested
a hearing. Since a court is not invariably
required to provide a hearing before imposing
sanctions, the appellants’ failure to request a
hearing waives any right they might have had to
one. See Kapco, 886 F.2d at 1495 (suggesting that
request for hearing after sanctions were imposed
was too late). Accordingly, the bankruptcy court
did not err by imposing sanctions without holding
a hearing./4

B.   Abuse of Discretion

      The appellants next challenge the merits of the
bankruptcy court’s decision to sanction them. We
review a decision to impose sanctions for an
abuse of discretion. Hancock, 192 F.3d at 1085.
Unless the sanctioning court has acted contrary
to the law or reached an unreasonable result, we
will affirm the sanctions decision. See generally
Hernandez v. Joliet Police Dept., 197 F.3d 256,
264 (7th Cir. 1999); Johnson v. Kakvand, 192 F.3d
656, 661 (7th Cir. 1999).

      The appellants first argue that the sanctions
imposed against them must be reversed because the
bankruptcy court failed to make an explicit
finding of bad faith. The parties agree that the
bankruptcy court could only exercise its
authority under 11 U.S.C. sec. 105(a) and the
inherent powers doctrine to impose sanctions if
the appellants acted in bad faith./5 It is also
agreed that the bankruptcy court did not
explicitly say that the appellants acted in bad
faith. Still, it is impossible to read the
bankruptcy court’s opinion without concluding
that the bankruptcy court did in fact determine
that the appellants acted in bad faith. For
example, the bankruptcy court found that
Kauthar’s attorneys, acting in concert, had
decided in advance to sabotage the Lau deposition
and that they did so intentionally and for the
purposes of imposing costs on Tongasat and
delaying the upcoming hearing on the
Tongasat/Rimsat compromise. Such conduct
certainly qualifies as bad faith conduct, even if
the bankruptcy court never said so in so many
words. Nevertheless, the appellants contend that
the bankruptcy court’s failure to use the words
"bad faith" requires that we reverse the
bankruptcy court’s sanctions order./6

      We disagree. Reversing an order imposing
sanctions in the face of findings like those made
by the bankruptcy court in this case simply
because the sanctioning court did not use the
words "bad faith" would needlessly elevate form
over substance. Where it is clear that a court
has found that a litigant intentionally abused
the judicial process in an unreasonable and
vexatious manner, we will not reverse an order
imposing sanctions merely because the sanctioning
court did not make an explicit finding of "bad
faith." Cf. In re Volpert, 110 F.3d 494, 500-01
(7th Cir. 1997) (affirming sanctions order under
11 U.S.C. sec. 105(a) without mentioning any
explicit finding of bad faith by the sanctioning
court). In this case, the bankruptcy court’s
failure to make an explicit finding of "bad
faith" does not require us to reverse the
sanctions it imposed against the appellants.

      The appellants next argue that their conduct
did not warrant sanctions in any event. With
respect to Voelker and Howard this argument is
impossible to accept. They were the ones who
conducted the Lau deposition in an unproductive
and harassing manner, and such behavior is
undoubtedly sanctionable. See generally Carroll
v. Jacques Admiralty Law Firm, P.C., 110 F.3d 290
(5th Cir. 1997) (sanctions imposed based on
abusive conduct during deposition); Sassower v.
Field, 973 F.2d 75, 78 (2d Cir. 1992) (sanctions
imposed based on a pattern of vexatious conduct
including "incredibly harassing depositions");
Heinrichs v. Marshall & Stevens Inc., 921 F.2d
418 (2d Cir. 1990) (sanctions imposed based on
improper conduct at depositions). Voelker and
Howard, nevertheless, attempt to explain their
conduct at the deposition as a reasonable
response to Lau’s intransigence. But, even if
their conduct could be given the innocent
explanation they urge, the bankruptcy court did
not abuse its discretion in interpreting the
events differently.

      With respect to Factor, the question is a
closer one, as there is no direct evidence of his
participation in the scheme to sabotage the Lau
deposition. Still, there is sufficient
circumstantial evidence that Factor acted in
concert with Voelker and Howard and that Factor
shares responsibility for the scheme. To begin
with, Factor was the attorney for Kauthar who
noticed the Lau deposition. Likewise, he signed
the motion to compel the Princess’s deposition,
a deposition the bankruptcy court considered to
be a part of the plan to delay the proceedings
and otherwise inconvenience Tongasat and those
associated with Tongasat. Moreover, he, Voelker,
and Howard were all members of the same law firm
and jointly represented Kauthar in the bankruptcy
proceedings. In fact, it was Factor who argued
against Tongasat’s objection to Kauthar’s request
to depose the Princess and who chose to go ahead
and depose Lau. Perhaps most significantly,
however, the bankruptcy judge, who was
undoubtedly familiar with the roles played by the
various counsel who appeared before him, found
that Factor acted in concert with Voelker and
Howard to sabotage the Lau deposition. For all
these reasons, it is impossible to conclude that
the bankruptcy court abused its discretion in
sanctioning Factor.

      The appellants next argue that, even if
sanctions are appropriate, the sanctions the
bankruptcy court imposed are excessive and
unwarranted. However, the appellants did not make
these arguments to the bankruptcy court in their
response to Tongasat’s motion for sanctions. And,
such arguments must be made to the sanctioning
court if they are to be considered by a reviewing
court, as the failure to make an argument
constitutes waiver of that argument. In re
Kroner, 953 F.2d 317, 319 (7th Cir. 1992);
Magicsilk Corp. of N.J. v. Vinson, 924 F.2d 123,
125 (7th Cir. 1991) (per curiam). Since the
appellants did not argue (at least in a timely
fashion/7) that any of the sanctions proposed by
or to the bankruptcy court would have been
excessive or unwarranted if in fact sanctions
were appropriate, we will not consider their
arguments on appeal.

      Finally, Factor, alone, argues that because
ordinary procedural rules would have been
adequate to address the misconduct on his part,
the bankruptcy court abused its discretion by
resorting to 11 U.S.C. sec. 105(a)/8 and its
inherent powers. Specifically, Factor suggests
that Bankruptcy Rules 9011/9 and 7026/10
(which largely track Rules 11 and 26 of the
Federal Rules of Civil Procedure) would have been
adequate to sanction his misconduct. The
bankruptcy court opted instead to rely on its
authority under 11 U.S.C. sec. 105(a) and the
inherent powers doctrine because Rules 9011 and
7026 would only allow the court to sanction
Factor, as he was the only one who signed the Lau
notice of deposition.

      A sanctioning court should ordinarily rely on
available authority conferred by statutes and
procedural rules, rather than its inherent power,
if the available sources of authority would be
adequate to serve the court’s purposes. Chambers
v. NASCO, Inc., 501 U.S. 32, 50 (1991); Corley v.
Rosewood Care Ctr., Inc. of Peoria, 142 F.3d
1041, 1058-59 (7th Cir. 1998). But, this rule
does not require the sanction imposed on Factor
to be reversed. To begin with, the bankruptcy
court acted pursuant to its statutory authority
under 11 U.S.C. sec. 105(a) as well as its
inherent powers. Thus, it is unlikely that the
rule to which Factor appeals even applies to his
situation. Moreover, a sanctioning court is not
required to apply available statutes and
procedural rules in a piecemeal fashion where
only a broader source of authority is adequate to
justify all the necessary sanctions. Chambers,
501 U.S. at 50-51. The bankruptcy court was
justified in resorting to 11 U.S.C. sec. 105(a)
and its inherent powers in order to ensure that
all the culpable parties received an appropriate
sanction and did not abuse its discretion in
declining to sanction Factor under Bankruptcy
Rule 9011 or 7026.

C.   Timeliness of Sanctions

      The appellants contend that the 13-month delay
between the bankruptcy court’s acceptance of the
proposed compromise of the Tongasat claims and
the final issuance of its sanctions order
requires that the sanctions order be reversed.
The appellants cite Prosser v. Prosser, 186 F.3d
403 (3d Cir. 1999), in which the Third Circuit,
pursuant to a rule announced under its
supervisory power, reversed a sua sponte
sanctions order that was entered after final
judgment. In an effort to prevent piecemeal
appeals and ensure that the deterrent effect of
a sanction is not dissipated through delay, the
Third Circuit held that such orders must be
entered prior to final judgment if they are based
on conduct occurring prior to that time. Id. at
405-06.

      Even if we were persuaded to adopt the same
rule the Third Circuit has, but Cf. Divane v.
Krull Elec. Co., 200 F.3d 1020, 1025 (7th Cir.
1999) (rejecting proposal to require Rule 11
motions to be filed before final judgment), the
present case would not call for the application
of the rule. To begin with, while the
Tongasat/Rimsat compromise had been approved, the
bankruptcy action itself remained open and
Kauthar remained an active litigant. Thus, the
approval of the Tongasat/Rimsat compromise (even
if it were considered an appealable final
decision) does not create the same sort of
finality as an ordinary final judgment and
therefore does not justify the same requirement
that sanctions orders be issued before a court
enters a final judgment. Moreover, the Third
Circuit’s rule appears to apply only to sua
sponte sanctions orders. Here the sanctions order
was the product of a sanctions motion filed by
Tongasat. In sum, while lengthy delays in the
imposition of sanctions are not preferable, we do
not believe the delay that occurred in this case
warrants reversing the bankruptcy court’s
sanctions order.

IV

      In sanctioning the appellants the bankruptcy
court did not deprive the appellants of due
process, abuse its discretion to impose
sanctions, or otherwise commit reversible error.
Accordingly, we AFFIRM the bankruptcy court’s order
imposing sanctions against the appellants.
/1 Pro hac vice status allows an attorney who has
not been admitted to practice before a court to
practice before that court in a particular case.
See Black’s Law Dictionary 1227-28 (7th ed.
1999).

/2 After it appealed, Kauthar reached a settlement
with the other parties to the bankruptcy
proceeding, including Tongasat, releasing each
party from any claim relating to the proceeding
that might be asserted by any of the other
parties. Thus, Kauthar’s challenge to the
bankruptcy court’s sanctions order is moot and
Kauthar is dismissed as a party to this appeal.
See U.S. Bancorp Mortgage Co. v. Bonner Mall
Partnership, 513 U.S. 18 (1993). However, because
Voelker, Howard, and Factor are not parties to
the settlement agreement and a release would not
address the revocation of their pro hac vice
status, their challenges to the bankruptcy
court’s sanctions order are not moot.

/3 Appellants Kauthar, Voelker, and Howard also
request that we expunge certain portions of the
bankruptcy court’s order that they contend are
without factual support. While we certainly may
reverse or vacate the bankruptcy court’s decision
to impose sanctions, we seriously doubt whether
we can expunge portions of the court’s order. The
authority we have discovered, although not
directly on point, suggests that such relief is
not available by way of appeal. See Clark Equip.
Co. v. Lift Parts Mfg. Co., 972 F.2d 817, 820
(7th Cir. 1992) (refusing to vacate opinion
criticizing attorney, but mentioning that the
attorney might seek mandamus); Bolte v. Home Ins.
Co., 744 F.2d 572 (7th Cir. 1984) (concluding
challenge to opinion criticizing, but not
sanctioning, attorney is not appealable). And,
the appellants have not cited any authority to
the contrary. Accordingly, we deny the request to
expunge portions of the bankruptcy court’s
opinion.

/4 The appellants also mention in passing an
allegation that they had inadequate notice of the
source of the authority the bankruptcy court
would invoke. Beside the fact that the appellants
never develop an argument on this ground, such an
argument would be a difficult one to make because
Tongasat specifically referred to 11 U.S.C. sec.
105(a) in its sanctions motion and a bankruptcy
court’s authority to act under that statutory
provision is often tied to the inherent powers
doctrine. See In re Volpert, 110 F.3d 494, 501
(7th Cir. 1997) (discussing without deciding the
issue).

/5 The parties’ agreement subsumes at least two
unresolved issues, whether a bankruptcy court can
act pursuant to the inherent powers doctrine, and
whether bad faith is required for a bankruptcy
court to exercise its authority under 11 U.S.C.
sec. 105(a). We offer no opinion on these issues.

/6 The appellants cite cases involving sanctions
imposed pursuant to the inherent powers doctrine
in which the reviewing court has required a
specific finding of bad faith. See, e.g., Roadway
Express, Inc. v. Piper, 447 U.S. 752, 767 (1980);
Elliott v. Tilton, 64 F.3d 213, 217 (5th Cir.
1995). However, it is impossible to tell from
these cases whether a sanctioning court would
have to use the words "bad faith" or whether
explicit findings demonstrating unequivocally
that the sanctioned party had acted in bad faith
would be sufficient. Accordingly, the cases the
appellants cite are not particularly helpful in
reviewing the sanctions order in this case.

/7 In a motion to reconsider, Factor did argue that
revoking his pro hac vice status was an excessive
sanction, but arguments raised for the first time
in a motion to reconsider are not preserved for
appeal. Green v. Whiteco Indus., Inc., 17 F.3d
199, 201 n.4 (7th Cir. 1994).

/8 In relevant part, 11 U.S.C. sec. 105(a) provides,
"The court may issue any order, process, or
judgment that is necessary or appropriate to
carry out the provisions of this title."

/9 The version of Rule 9011 in effect when Factor’s
misconduct took place allowed a bankruptcy court
to sanction an attorney who signed a pleading or
other paper that was frivolous or vexatious.
/10 Rule 7026 simply incorporates by reference
Federal Rule of Civil Procedure 26, which allows
a court to sanction an attorney who signs a
discovery request, response, or objection that is
frivolous or vexatious.