Court Opinion

ID: 1012124
Source: CourtListenerOpinion
Date Created: 2013-07-04 20:39:34.838318+00
Date Added: 2024-06-11T09:39:01.411813
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
               FOR THE FOURTH CIRCUIT

In Re: COMMUNITY MANAGEMENT             
CORPORATION OF MARYLAND,
                         Debtor.

BENJAMIN B. WEITZ; SHENANDOAH
ASSOCIATES LIMITED PARTNERSHIP;
JEFFERSON HOUSE ASSOCIATES LIMITED
PARTNERSHIP; LEESBURG MANOR                      No. 03-1020
ASSOCIATES LIMITED PARTNERSHIP;
WOODSTOCK ASSOCIATES LIMITED
PARTNERSHIP,
             Defendants-Appellants,
                v.
BARDYL R. TIRANA,
                            Appellee.
                                        
         Appeal from the United States District Court
           for the District of Maryland, at Greenbelt.
                Peter J. Messitte, District Judge.
     (CA-01-2848-PJM, BK-00-11624-PM, AP-00-1595-PM,
               AP-01-1046-PM, AP-01-1045-PM)

                      Argued: October 30, 2003

                     Decided: December 16, 2003

      Before WILKINS, Chief Judge, and NIEMEYER and
                  SHEDD, Circuit Judges.

Affirmed by unpublished per curiam opinion.
2               IN RE: COMMUNITY MANAGEMENT CORP.
                             COUNSEL

ARGUED: Alan I. Baron, DORSEY & WHITNEY, Washington,
D.C., for Appellants. David Drake Hudgins, HUDGINS LAW FIRM,
Alexandria, Virginia, for Appellee. ON BRIEF: Linda Popejoy,
DORSEY & WHITNEY, Washington, D.C.; Ronald L. Early,
LERCH, EARLY & BREWER, Bethesda, Maryland; Janet M. Nesse,
STINSON MORRISON HECKER, L.L.P., Washington, D.C., for
Appellants. Sean C.E. McDonough, HUDGINS LAW FIRM, Alexan-
dria, Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                             OPINION

PER CURIAM:

   The bankruptcy court imposed sanctions in this adversary proceed-
ing against Bardyl Tirana, counsel for the debtor, Community Man-
agement Corporation of Maryland ("CMC"), under Bankruptcy Rule
9011 for filing and pursuing this proceeding against Benjamin Weitz
and partnerships in which he had an interest (collectively, "Weitz").
On appeal, the district court reversed by an order dated October 11,
2002, and we now affirm that order.

   Prior to bankruptcy, in 1991, Weitz sold his ownership interest in
CMC to two former employees of CMC by means of a complex trans-
action involving a promissory note and collateralization of the note
with the stock of CMC. When payment under the note became in
default, the parties instituted multiple litigations in Maryland and in
Virginia, each involving claims and counterclaims.

   In February 2000, CMC filed a petition in bankruptcy under Chap-
ter 11, and thereafter the trustee hired Bardyl Tirana, who had repre-
sented CMC in its other litigation against Weitz, to represent CMC’s
                IN RE: COMMUNITY MANAGEMENT CORP.                      3
interests in bankruptcy-related litigation. Tirana filed this adversary
action on behalf of CMC, which Weitz alleged was the fourth suit in
which CMC asserted the same or similar claims. On Weitz’ motion,
the bankruptcy court dismissed most of CMC’s claims on the ground
that they were barred by res judicata and collateral estoppel and
imposed sanctions against Tirana in the amount of $33,000 because
Tirana filed the complaint "in the face of a clear bar based upon the
doctrines of res judicata or collateral estoppel." The bankruptcy court
rejected Weitz’ alternative ground for sanctions based on the argu-
ment that the claims were barred by the Colorado River doctrine. See
Colorado River Water Conservation District v. United States, 424
U.S. 800 (1976). The bankruptcy court concluded:

    Defendant’s reliance upon the Colorado River doctrine in
    support of this motion is inappropriate. The doctrine is a
    type of abstention that is discretionary. Therefore, this court
    will not consider the application of the Colorado River doc-
    trine as a basis for the imposition of sanctions.

(Citations omitted).

   On appeal to the district court, the district court reversed the bank-
ruptcy court’s imposition of sanctions, concluding that CMC’s claims
were not clearly barred by res judicata and collateral estoppel. Hav-
ing not been presented with the alternative argument under the Colo-
rado River doctrine, it did not review the bankruptcy court’s ruling
on that doctrine.

   In this appeal, Weitz does not challenge the district court’s ruling
that CMC’s claims were not clearly barred by res judicata and collat-
eral estoppel. Instead, he relies on the alternative ground presented to
the bankruptcy court that CMC’s claims against Weitz were barred
under the Colorado River doctrine.

   Without resolving the complex question of whether the bankruptcy
court’s ruling on the Colorado River doctrine is before us, see Scher-
ing Corp. v. Illinois Antibiotics Co., 89 F.3d 357, 358 (7th Cir. 1996);
Crocker v. Piedmont Aviation, Inc., 49 F.3d 735, 741 (D.C. Cir.
1995), we conclude that the bankruptcy court did not abuse its discre-
tion in rejecting Weitz’ alternative argument that sanctions should be
4               IN RE: COMMUNITY MANAGEMENT CORP.
imposed because the claims were barred by the Colorado River doc-
trine.

   Under the Colorado River doctrine, a federal court may, in rare
cases, abstain from exercising jurisdiction over a federal action when
a parallel state suit exists. 424 U.S. at 818-19. Abstention, however,
is "the exception rather than the rule," with the balance of factors
"heavily weighted in favor of the exercise of [federal] jurisdiction."
Al-Abood v. El-Shamari, 217 F.3d 225, 232 (4th Cir. 2002) (citation
and internal quotation marks omitted). Weitz contends that sanctions
were warranted because Tirana filed duplicative pleadings and should
have known that the bankruptcy court would invoke the Colorado
River doctrine and refuse to exercise jurisdiction. However, given the
discretionary nature of the Colorado River doctrine and the heavy
presumption in favor of the exercise of jurisdiction, application of the
doctrine would rarely, if ever, be so certain as to warrant sanctions for
the filing of a parallel action in federal court. Certainly, the bank-
ruptcy court did not abuse its discretion in rejecting this ground for
sanctions.

  Accordingly, we affirm the October 11, 2002 order of the district
court denying sanctions.

                                                            AFFIRMED