Court Opinion

ID: 2759147
Source: CourtListenerOpinion
Date Created: 2014-12-10 13:00:50.67758+00
Date Added: 2024-06-11T10:36:52.207960
License: Public Domain

Case: 14-12606    Date Filed: 12/10/2014   Page: 1 of 6

                                                         [DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                           No. 14-12606
                       Non-Argument Calendar
                     ________________________

              D.C. Docket No. 4:14-cv-00068-BAE-GRS,
                      Bkcy No. 07-bkc-10454

SPORTMAN’S LINK, INC.,

                                                                       Plaintiff,

                               versus

KLOSINSKI OVERSTREET, LLP,

                                                           Defendant-Appellee,

SOHAIL ABDULLA,

                                                     Interested Party-Appellant.

                     ________________________

              Appeal from the United States District Court
                 for the Southern District of Georgia
                    ________________________

                           (December 10, 2014)
              Case: 14-12606     Date Filed: 12/10/2014    Page: 2 of 6

Before WILLIAM PRYOR, JULIE CARNES and FAY, Circuit Judges.

PER CURIAM:

      Sohail Abdulla appeals pro se the denial of his motion for disgorgement of

fees and objection to the distribution of assets to Klosinski Overstreet, LLP, for its

legal representation of Abdulla’s former business, Sportsman’s Link, Inc., during

its bankruptcy proceeding. We affirm.

      Sportsman’s retained Klosinski to assist in filing a petition for bankruptcy

under Chapter 11, and Abdulla paid Klosinski a $20,000 retainer. Later,

Sportsman’s petition was converted to a Chapter 7 petition, and the Chapter 7

Trustee retained Klosinski as special counsel to pursue preference and fraudulent

transfer actions for the Sportsman’s estate. Klosinski filed 23 adversary

proceedings and recovered more than $500,000 for the estate.

      In July 2011, Sportsman’s, through counsel, filed an adversary proceeding

against Klosinski for legal malpractice and breach of its fiduciary duties. The

Chapter 7 Trustee filed an application to compromise the controversy for $20,000.

Sportsman’s objected and argued that Klosinski’s failure to disclose its

connections to two creditors, Georgia Bank & Trust Company of Augusta and

Fairway Ford of Augusta, Inc., violated Federal Rule of Bankruptcy Procedure

2014(a) and should result in a disgorgement of fees related to those collections.

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      After a full-day evidentiary hearing on the Trustee’s application, the

bankruptcy court approved the compromise as reasonable because Sportsman’s

was not damaged by Klosinski’s failure to disclose, but the bankruptcy court

reserved ruling on whether Klosinski should disgorge its fees pending a report and

recommendation from the United States Trustee. The US Trustee reported that,

although Klosinski did not have an actual conflict of interest, it had violated Rule

2014 by failing to disclose its connections with the two creditors. The US Trustee

moved to sanction Klosinski and recommended that the bankruptcy court reduce

Klosinski’s fees by $15,241.88 for its work in the Chapter 11 proceeding and by

$12,589.84 for its work in the Chapter 7 proceeding.

      In May 2012, the bankruptcy court held a hearing to impose sanctions on

Klosinski for its violation of Rule 2014(a), which Abdulla and Sportsman’s

counsel failed to attend. The bankruptcy court determined that Klosinski’s failure

to disclose its connection to Georgia Bank during the Chapter 11 proceeding was

purposeful and material and reduced Klosinski’s fees in that proceeding by

$20,000. The bankruptcy court also reduced Klosinski’s fees in the Chapter 7

proceeding by $30,000 for its ongoing failure to disclose its association with

Georgia Bank and required Klosinski to forfeit its entire fee of $3,300 for failing to

disclose its previous representation of Fairway.

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      After the deadline expired to object to the Trustee’s final report, Abdulla

moved pro se for disgorgement of fees and objected to the distribution of the assets

of the Sportsman’s estate to Klosinski. Abdulla sought disgorgement of a $20,000

retainer fee that he had given Klosinski and he objected to the payment of fees to

Klosinski until there was “an investigation by an independent Special Counsel to

examine the actions of all the attorneys involved.” Abdulla alleged that Klosinski

had wrongfully induced Sportsman’s to enter a contract with another law firm; had

made misrepresentations in its disclosures to the bankruptcy courts; and had

concealed some of its fee arrangements. Abdulla also repeated in his motion the

allegations made by Sportsman’s that Klosinski had committed legal malpractice

and breached its fiduciary duties.

      The district court denied Abdulla’s motion. The district court ruled that

Abdulla lacked standing to seek the disgorgement of fees because he did not have a

pecuniary interest in the retainer he had paid on Sportsman’s behalf or in the fees

paid by Sportsman’s estate. The district court denied Abdulla’s request for a sua

sponte investigation because he would not benefit from the disgorgement of

Klosinski’s fees and because it was “satisfied . . . after [a] review of the record . . .

that the Bankruptcy Court [had] sufficiently policed Sportsman’s former attorneys

and punished them for any misconduct.”

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      We conclude that Abdulla has abandoned any challenge that he might have

made to the denial of his request for the disgorgement of fees. “While we read

briefs filed by pro se litigants liberally, issues not briefed on appeal by a pro se

litigant are deemed abandoned.” Timson v. Sampson, 518 F.3d 870, 874 (11th Cir.

2008) (internal citations omitted). Abdulla states that he “do[es] not expect any

money from this case” and requests that we review the denial of his request for his

“allegations and . . . evidence to be investigated and considered by an independent

authority.” We deem abandoned Abdulla’s request for the disgorgement of fees.

      Abdulla lacks standing to request a special investigation about Klosinski’s

representation of Sportsman’s. To appeal an order entered in a bankruptcy

proceeding, a person must be “directly, adversely, and pecuniarily affected” by the

decision. In re Ernie Haire Ford, Inc., 764 F.3d 1321, 1325 (11th Cir. 2014).

Abdulla cannot benefit from an investigation that would result in further sanctions

being imposed on Klosinski because those sanctions would flow to Sportman’s

estate, not to Abdulla.

      Even if Abdulla had standing to request further investigation of Klosinski,

the district court did not abuse its discretion. The district court has inherent powers

to discipline attorneys for misconduct and to investigate if it has been a victim of

fraud, but “[b]ecause of their very potency, inherent powers must be exercised with

restraint and discretion.” Chambers v. NASCO, 501 U.S. 32, 43–44, 50 111 S. Ct.
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2123, 2132 (1991). The district court took “seriously [the] allegations” against

Klosinski and reasonably determined that the bankruptcy court had adequately

investigated and punished Klosinski. The record reflects that the bankruptcy court

examined Sportsman’s contentions and the reports, evidence, and arguments of the

Chapter 7 Trustee and the US Trustee and made an independent determination that,

although Klosinski’s misconduct did not constitute malpractice, its failure to

disclose violated Rule 2014(a) and warranted harsher sanctions than those

recommended by the US Trustee. In the light of the thorough examination of

Klosinski’s conduct by the bankruptcy court, the district court reasonably

“exercised . . . restraint” and declined to conduct a further investigation.

      We AFFIRM the denial of Abdulla’s motion for disgorgement of fees and

objection to the distribution of assets.

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