Court Opinion

ID: 198942
Source: CourtListenerOpinion
Date Created: 2011-02-07 04:20:00+00
Date Added: 2024-06-11T17:26:56.494703
License: Public Domain

213 F.3d 6 (1st Cir. 2000)
EMPRESAS OMAJEDE, INC., Plaintiff, Appellant,v.A.J. BENNAZAR-ZEQUEIRA; LA ELECTRONICA, INC.; WILLIAM VIDAL-CARVAJAL; ANTONIO I. HERNANDEZ-RODRIGUEZ; ISMAEL COLON-PEREZ; CARLOS R. RIOS-GAUTIER; CARLOS JUAN POU; Defendants, Appellees.
No. 99-1242
United States Court of Appeals For the First Circuit
Heard March 7, 2000Decided May 24, 2000

Antonio Betancourt for appellant.
Jose R. Garca-Perez, with whom Bufete Bennazar, C.S.P. was on  brief, for appellee A.J. Bennazar-Zequeira.
William M. Vidal-Carvajal, with whom Antonio I. Hernandez-Rodrguez was on brief, for appellees Antonio I. Hernandez-Rodrguez, William M. Vidal-Carvajal and Ismael R. Colon-Perez.
Juan Carlos Pou with whom Juan Carlos Pou Law Offices was on  brief, for appellees Juan Carlos Pou and Carlos R. Ros-Gautier.
Before: Torruella, Chief Judge, Coffin, Senior Circuit Judge, and Lipez, Circuit Judge.
TORRUELLA, Chief Judge.

1
This appeal presents a  particularly ugly set of facts, in which a divorce and division of  conjugal property have given rise to some five bankruptcy  proceedings and thirteen adversary proceedings, which together have  burdened the bankruptcy court, the district court, and now this  Court.  We need not reach the merits of the current sanctions  dispute, however, because we do not have jurisdiction to consider  the present appeal at this time.  Furthermore, because we find this  appeal to have been frivolously and vexatiously filed, we award  costs to the appellees and grant appellee Bennazar's motion for  attorney's fees.

I.  Factual Background

2
We give only a very brief factual background, omitting  the details of the underlying domestic squabbles and related  bankruptcy proceedings, although we do not doubt their relevancy to  the sanctions issue.

3
Following the divorce of Reinaldo Betancourt-Viera and  Olga Capo-Roman, the ensuing division of conjugal property resulted  in, inter alia, (1) Ms. Capo-Roman and her two children, Antonio  Betancourt and Delfina Betancourt, acquiring equity securities in  a company called Empresas Omajede, Inc. and (2) Mr. Betancourt  Viera and his daughter from another marriage, Mara Luisa  Betancourt, becoming the principals of La Electronica, Inc., an  affiliate of Empresas Omajede.  For reasons not explained to this  Court, La Electronica filed a petition for bankruptcy on June 28,  1989, and Empresas Omajede filed a petition for reorganization on  July 13, 1990.  That litigation somehow blossomed to include a  total of five bankruptcy and thirteen adversary proceedings before  the bankruptcy court, several of which have been appealed to the  district court, and at least one aspect of which now concerns this  Court.

4
On February 24, 1994, Antonio Betancourt, Delfina  Betancourt, and Olga Capo-Roman filed a motion requesting that the  bankruptcy court impose sanctions pursuant to Federal Rule of Civil  Procedure 11 on A.J. Bennazar-Zequeira, Antonio Hernandez-Rodrguez, William Vidal-Carvajal, Ismael Colon-Perez, Carlos Ros-Gautier, Juan Carlos Pou, Mara Luisa Betancourt,1 and La  Electronica.  Bennazar, Hernandez, Vidal, Colon, Ros, and Pou are  all attorneys who at some time during these proceedings represented  La Electronica, but who have since withdrawn their appearances. The motion alleged that the attorneys, La Electronica,  Mr. Betancourt-Viera and Mara Luisa Betancourt engaged in a  "persistent pattern of clearly abusive litigation activity"  warranting sanctions under Rule 11.

5
The bankruptcy court denied the motion for sanctions  without reasons in a margin order.  On appeal, the district court  remanded to the bankruptcy court for a statement of reasons.  SeeEmpresas Omajede, Inc. v. Bennazar-Zequeira, Civ. No. 98-1374  (D.P.R. Jan. 31, 1997).  On remand to the bankruptcy court, another  motion for sanctions pursuant to Federal Rule of Bankruptcy  Procedure 9011 was filed December 30, 1997, alleging further abuses  by attorneys Hernandez, Vidal, and Colon.  The bankruptcy court  reaffirmed its prior decision on the Rule 11 motion and denied the  Rule 9011 motion in a written opinion issued January 26, 1998. See In re Empresas Omajede, Inc., B90-03612 (Bankr. P.R. filed  Feb. 5, 1998) (hereinafter "Bankr. Op.").  The court made specific  findings as to the allegations against each responding attorney and  held that none had engaged in sanctionable conduct.  The court  added the following:

6
This court's denial of the motion [for  sanctions] was based in part upon a finding  that the conduct complained of did not  constitute a violation of Fed. R. Civ. P. 11. However, and perhaps more importantly, it  reflected this court's impression that the  litigation tactics objected to are not unknown  to the debtor corporation and the various  attorneys who have represented it.  In so  stating, the court does not mean to impugn any  of the respected professionals who have been  involved in this case and related matters;  rather it is a reflection upon the parties  themselves, who have allowed and encouraged  what began as a domestic matter between Don  Reinaldo Betancourt Viera and Dona Olga Capo  Roman to balloon into an all-out war which has  lasted nearly nine years, encompassed (to  date) five bankruptcy proceedings and thirteen  adversary proceedings, and cost hundreds of  thousands of dollars in attorney's fees and  untold hours of the bankruptcy and district  courts spent resolving these matters, only to  have the parties renew their arguments in a  different manner, in a different proceeding,  or in a different forum.

7
Bankr. Op. at 9.

8
The district court, on December 22, 1998, upheld the  bankruptcy court's denial of the motion for sanctions.2  The  district court noted that the bankruptcy court was "steeped in the  facts and sensitive to the interplay amongst the protagonists" and  deferred to the bankruptcy court's determination that sanctions  were inappropriate.  See In re Empresas Omajede, Inc., 227 B.R.  767, 769 (D.P.R. 1998).

9
True to form, Antonio Betancourt, Delfina Betancourt, and  Olga Capo-Roman brought this appeal,3 renewing their allegations of  outrageous tactics by the former attorneys for La Electronica.  At  oral argument, it was disclosed that some part of the underlying  bankruptcy litigation between the parties was still ongoing before  the bankruptcy court.  The Court requested that the parties submit  supplemental briefs on the issue of whether the Court had  jurisdiction to entertain the present appeal.  The Court has  received those supplemental briefs, and it now appears that  judgment has been entered by the bankruptcy court in all but one of  the underlying proceedings, but several of those decisions are  pending appeal before the district court.  Furthermore, at the time  of the district court's December 22, 1998 decision affirming the  denial of sanctions, judgment had not been rendered in Omajede's  bankruptcy proceeding.  Given that procedural history, the first  question we must reach today is whether the bankruptcy court's  order denying sanctions was immediately appealable despite its  interlocutory nature.  We hold that it was not.

II.  Law and Application
A.  Jurisdiction

10
Even if an award of sanctions were appealable by a  sanctioned attorney prior to the entry of judgment,4 the denial of  a sanctions motion is not subject to interlocutory appeal.  See, e.g, McWright v. Santoki, 976 F.2d 568 (9th Cir. 1992); Haskell v. Washington Township, 891 F.2d 132 (6th Cir. 1989).  This is  consistent with the general rule that the denial of a motion is not  immediately appealable, and we agree with our sister circuits that Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949),  does not provide for interlocutory review of a denial of sanctions. The district court, therefore, was without jurisdiction to hear  appellants' appeal before final judgment was granted in the  underlying bankruptcy proceedings, and we are likewise without  jurisdiction to consider the sanctions issue until the bankruptcy  court and the district court have entered final judgments in this  case.  The appeal will be dismissed.

B.  Attorney's Fees and Costs

11
Although we do not have jurisdiction to review the denial  of sanctions, there are two matters over which we do have  jurisdiction: a motion filed by appellee Bennazar requesting  attorney's fees and costs, and the requests of other appellees  seeking costs.  These matters are properly before us because they  concern the nature of the present appeal, rather than the merits of  the decisions rendered below.  Furthermore, although we presently  have no jurisdiction to determine whether sanctions should have  been granted below, we are not bound to ignore the background  information provided by the parties' briefs and by the written  opinions of the lower courts, insofar as that information  establishes the frivolous and vexatious nature of the present  appeal, which we feel it does.

1.  Motion for Fees and Costs

12
Appellee A.J. Bennazar-Zequeira filed a Surreply And/Or  Motion Under 28 U.S.C. § 1927 seeking attorneys fees and costs  against appellants for filing this appeal against him.  As the  bankruptcy court noted in its opinion denying sanctions against  Bennazar and others, appellants' claim against Bennazar was based  solely on his involvement in the preparation of a single motion,  which the bankruptcy court granted in part.  See Bankr. Op. at 5,  7.  The bankruptcy court specifically found that Bennazar engaged  in no conduct that might warrant sanctions under Rule 11.  See id. at 5.

13
Appellants have nevertheless dragged attorney Bennazar  through a round of appeals before the district court and now into  this Court, at a cost of considerable time and money to Bennazar as  well as to the courts.  The only conceivable motive for such  inclusion, it seems to us, is the continued harassment of Bennazar  (along with the other appellees).  This conclusion is strengthened  by the frivolity of the present appeal, which is based solely on a  challenge to the denial of sanctions by the bankruptcy court. Although we do not find a case from this circuit specifically  dealing with the denial of a sanctions motion under the Bankruptcy  Rules and Rule of Civil Procedure 11, the existing case law is such  that appellants should have known that their chances of success  were infinitesimal.  See Cunningham, 119 S. Ct. at 1917 (order  imposing sanctions on an attorney pursuant to Federal Rule of Civil  Procedure 37(a)(4) was not an appealable final decision, even  though the attorney was no longer involved in the case); Kouri-Perez, 187 F.3d at 14 (finding sanctions order pursuant to district  court's "inherent powers" not immediately appealable); Appeal of  Licht & Semonoff, 796 F.2d at 573 (finding sanctions pursuant to  Federal Rule of Civil Procedure 26(g) not immediately appealable). Although we do not suggest that every "long shot" appeal is  frivolous, the particular history of this case is such that we can  infer that the likelihood of failure was easily outweighed by the  desire to harass the appellees, and the limited involvement of  attorney Bennazar in the underlying proceedings heightens the  frivolity and vexatious nature of the appeal as to him in  particular.  Under the circumstances, we think that Bennazar's  unopposed motion for attorney's fees and costs is justified, and we  award him $5,000 in attorney's fees, as well as costs under Federal  Rule of Appellate Procedure 38.

2.  Costs to Other Appellees

14
Appellees Rodrguez, Carvajal, and Perez also requested  costs and fees in the conclusion of their initial brief filed with  this court.  We do not feel, at this time, that these appellees  have sufficiently established that they are entitled to attorney's  fees.  We do, however, find that they are entitled to an award of  costs, both because we think that this appeal borders on  sanctionable frivolity as against all appellees and because the  award of costs to appellees is normal when an appeal is dismissed. See Fed. R. App. P. 39(a)(1).  We therefore grant the request of  Rodrguez, Carvajal, and Perez for costs, and we award costs sua  sponte to the remaining appellees.

III.  Conclusion

15
For the reasons stated, we dismiss the appeal, award  $5,000 in attorney's fees to appellee Bennazar, and award costs to  all appellees.5

16
Dismissed.

Notes:

1
   The motion was withdrawn as to Ms. Betancourt after her death in  1995.

2
   The district court stated, without analysis, that it had  jurisdiction pursuant to 28 U.S.C. § 158(a).

3
   Despite the caption, these three individuals are the true  appellants in this case, rather than the corporation as such. Appellants filed the sanctions motion with the bankruptcy court,  acting in their capacities as individual equity security holders of  Empresas Omajede, Inc.

4
   Although the circuits were until recently divided on the  question of whether an attorney no longer representing a party  could take an interlocutory appeal from a sanctions order in the  underlying case, the Supreme Court has now spoken on this precise  issue.  In Cunningham v. Hamilton County, Ohio, 119 S. Ct. 1915,  1917 (1999), the Court held that an order imposing sanctions on an  attorney pursuant to Federal Rule of Civil Procedure 37(a)(4) was  not an appealable final decision, even though the attorney was no  longer involved in the case.  That determination confirms our  previous decisions in this area.  See United States v. Kouri-Perez,  187 F.3d 1, 14 (1st Cir. 1999) (finding sanctions order pursuant to  district court's "inherent powers" not immediately appealable); Appeal of Licht & Semonoff, 796 F.2d 564, 573 (1st Cir. 1986)  (finding sanctions pursuant to Federal Rule of Civil Procedure  26(g) not immediately appealable).

5
   As noted above, Antonio Betancourt, Delfina Betancourt, and Olga  Capo-Roman are the appellants in this case, despite the caption's  reference to Empresas Omajede, Inc.  Therefore, costs and fees  shall be charged to the individual appellants, rather than to the  corporation.