Court Opinion

ID: 9483608
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:26:06.568391+00
Date Added: 2024-06-11T17:49:43.468706
License: Public Domain

ROTH, Circuit Judge,
concurring.
I write separately because I differ from the conclusion of the majority that they need not address the issue of “inherent powers.” Because Stuebben sought attorney’s fees and costs not only pursuant to Bankruptcy Rules 7054, 7056, and 9011, but also pursuant to the court’s “inherent power” to impose sanctions, I conclude that the bankruptcy court abused its discretion by failing to articulate its reason, if any, for not invoking its inherent sanctioning powers.
My conclusion subsumes a determination first of all that bankruptcy courts do possess inherent powers to sanction. I find authority for this position in the Supreme Court’s discussion in Chambers v. NASCO, — U.S. -, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991). I consider it logical that a bankruptcy court, like any other court of justice, is “vested, by [its] very creation, with power to impose silence, respect, and decorum, in [its] presence, and submission to [its] lawful mandates.” Id. at -, 111 S.Ct. at 2132 (citations omitted). Such power “ ‘is governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to *964achieve the orderly and expeditious disposition of cases.’ ” Id. (quoting Link v. Wabash R. Co., 370 U.S. 626, 630-31, 82 S.Ct. 1386, 1389, 8 L.Ed.2d 734 (1962)). Indeed, citing these statements from Chambers, the Court of Appeals for the Fifth Circuit has concluded that a “bankruptcy court has the inherent power to award sanctions for bad-faith conduct in a bankruptcy court proceeding.” Citizens Bank & Trust Co. v. Case (In re Case), 937 F.2d 1014, 1023 (5th Cir.1991). I agree.
Turning then to the nature of inherent powers, in addition to the authority for imposing sanctions contained in the Bankruptcy Rules, federal courts have an inherent power to sanction a party or an attorney who has “ ‘acted in bad faith, vexatiously, wantonly, or for oppressive reasons.’ ” Chambers, — U.S. at -, 111 S.Ct. at 2133 (quoting Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-59, 95 S.Ct. 1612, 1622, 44 L.Ed.2d 141 (1975)); see Quiroga v. Hasbro, Inc., 934 F.2d 497, 504 (3d Cir.1991) (“[I]t is well established that courts have the power to impose sanctions on both litigants and attorneys to regulate their docket, to promote judicial efficiency, and to deter abuse of judicial process”), cert. denied, — U.S. -, 112 S.Ct. 376, 116 L.Ed.2d 327 (1991). This power supplements other mechanisms that permit courts to impose sanctions and serves at least “to fill in the interstices” left between .statutory sanctioning provisions and rules. See Chambers, — U.S. at -, 111 S.Ct. at 2134.
The bankruptcy court found that the debtors in the present case in fact fraudulently signed false documents, failed to disclose material information, and attempted to prevent their creditor from recovering assets. These activities might well require the imposition of sanctions to redress any “fraud [that] has been practiced upon [the court].” Chambers, at -, 111 S.Ct. at 2133 (quotation omitted). While Rules 9011 and 7056 may provide the mechanisms to remedy all or most of the wrongs committed upon the court in the present case, this court has consistently demanded, when sanctions were permissible under multiple sanctioning powers, that “the resulting findings must appear with reasonable specificity in terms of the perceived misconduct and the sanctioning authority.” Jones v. Pittsburgh Nat’l Corp., 899 F.2d 1350, 1359 (3d Cir.1990); see Quiroga, 934 F.2d at 505 (upholding award of attorneys fees under Title YII but remanding for consideration of sanctions under court’s inherent powers).
I find that the bankruptcy court’s failure to include any discussion of why it refused to use inherent sanctioning powers in the present case to be an abuse of its discretion. While a court’s discretion in invoking those powers is substantial, see Quiroga, 934 F.2d at 505, discussion of its analysis is crucial both to insure that its discretion has not been abused and to inform properly the involved parties of the precise basis upon which any sanctions have been imposed. See, e.g. Schake v. Colt Indus. Operating Corp. Severance Plan, 960 F.2d 1187, 1193 (3d Cir.1992) (finding district court in error for “offering no explanation for its decision to award attorney’s fees”); Lony v. E.I. DuPont de Nemours, 935 F.2d 604, 616-17 (3d Cir.1991) (remanding case for further consideration of Rule 11 motion); Lieb v. Topstone Indus., Inc., 788 F.2d 151, 156 (3d Cir.1986) (stating that “[b]ecause we are unable to determine whether the district court properly exercised its discretion, we will remand for an articulation of reasons”). Just as it is necessary for a court to explain why a particular sanction is appropriate under Rules 9011 and 7056, it is necessary to explain why invoking the court’s inherent sanctioning powers would be inappropriate when the facts of a case suggest their use. Because the bankruptcy court made no such explanation, I believe the remand should include an instruction that the bankruptcy court articulate its reasons why it did not invoke its inherent sanctioning powers.