Court Opinion

ID: 2806579
Source: CourtListenerOpinion
Date Created: 2015-06-09 19:01:18.079696+00
Date Added: 2024-06-11T12:08:12.165943
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                              No. 14-1881

In Re:   ROBERT LEWIS, JR.,

                Appellant.

------------------------------------

DENNIS DARNAY WILLIAMS,

                Plaintiff,

           v.

MARJORIE K. LYNCH,

                Defendant – Appellee,

JAMES B. ANGELL,

                Party-in-Interest - Appellee.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh.   Terrence W. Boyle,
District Judge. (5:13-cv-00696-BO)

Submitted:   April 28, 2015                   Decided:   June 9, 2015

Before KEENAN, WYNN, and DIAZ, Circuit Judges.

Affirmed by unpublished per curiam opinion.

Robert Lewis, Jr., LEWIS LAW FIRM, Raleigh, North Carolina, for
Appellant.     Brian   C.  Behr,   OFFICE  OF   THE  BANKRUPTCY
ADMINISTRATOR,   Raleigh,  North   Carolina; James    B.  Angell,
Nicholas C. Brown, HOWARD, STALLINGS, FROM &         HUTSON, PA,
Raleigh, North Carolina, for Appellees.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

       Robert Lewis, Jr., appeals from the district court’s order

affirming the order of the bankruptcy court partially suspending

him    from    practicing       in    the   bankruptcy        court,         ordering      the

disgorgement of undisclosed attorney fees received, and imposing

a $2500 monetary sanction.                 He also appeals from the district

court’s affirmance of the bankruptcy court’s order reinstating

his    bar    privileges     after    an    additional        term     and    upon   Lewis’

compliance with the sanctions order.                  We affirm.

       During the investigation of a debtor in bankruptcy, the

Bankruptcy Administrator (“BA”) identified several discrepancies

within       the    debtor’s    bankruptcy           schedules       and     between       the

debtor’s statements and those prepared by his attorney, Robert

Lewis, particularly with respect to fees paid to Lewis.                                 After

further investigation, the BA filed a report of Lewis’ alleged

misconduct and moved for sanctions to be imposed against Lewis

for    violating      the    requirement     of      full   disclosure        of    fees    in

bankruptcy         cases.       The    BA    also       asserted       numerous         other

violations by Lewis, including the acceptance of more than $6000

from     the       debtor,    purportedly         toward      attorney’s        fees       for

prepetition         civil    litigation         of    which      the       debtor    denied

knowledge; continuing to represent the debtor without approval

from the bankruptcy court after conversion of the debtor’s case

to Chapter 11; violating the rule against “ghost-writing” appeal

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documents for         the    debtor;   and       failing     to    maintain     copies    of

filed    documents       that    contain       an      original    signature.            The

Chapter 7 Trustee also moved for sanctions on these same bases.

       After holding hearings on the BA’s and Trustee’s motions

for sanctions, the bankruptcy court determined that sanctions

were appropriate and temporarily suspended Lewis from initiating

new    bankruptcy      cases    on   behalf       of    clients     in    the   Bankruptcy

Court for the Eastern District of North Carolina until December

14,     2013.         With   respect      to      existing        clients,      Lewis    was

authorized to continue his representation, but was required to

submit monthly reports to the court and to the BA, certifying

that     he     was    the     attorney      of     record        and    disclosing      all

compensation paid or to be paid to him for his services in

connection with his pending bankruptcy cases.                           The court ordered

Lewis to pay $2500 in sanctions and to disgorge $8400 in fees.

The     court    additionally        ruled       that     Lewis’        reinstatement     to

practice was conditioned on his full compliance with the court’s

order.     The court warned Lewis that failure to fully comply will

result in more severe sanctions.

       During the hearing on Lewis’ reinstatement, the bankruptcy

court found that Lewis had not fully complied with the sanctions

order.        The court directed that Lewis’ privilege to practice

before the bankruptcy court would be reinstated on May 19, 2014,

provided that, before that date, Lewis paid the sanctions and

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disgorged the fee amount, as required by the court’s original

sanctions order.           The court also ordered that the heightened

reporting       requirements       imposed       on     Lewis       in      the     original

sanctions      order     would   continue       for     all   new    bankruptcy          cases

filed by Lewis.

       Lewis     appealed    from     the    sanctions          order       and   from      the

reinstatement order.          The district court affirmed the bankruptcy

court’s       rulings.       Lewis     noted      his    appeal        to    this      court,

challenging      the     authority     of   the       bankruptcy         court    to     order

sanctions, the nature of the sanctions imposed, and the fact

that the bankruptcy court did not issue findings of fact or

conclusions of law.              He also argued that the district court

erred by considering the Appellees’ brief filed in the appeal

from    the    reinstatement      order     in    deciding       the      issues       in   the

appeal    from    the     sanctions    order      and    erred      by      affirming       the

bankruptcy court’s disposition without holding oral argument.

       Lewis contends that the bankruptcy court lacks authority to

suspend the bar privileges of attorneys who practice in that

court, claiming that only the district court has such authority.

We do not agree.

       The bankruptcy court has the inherent power, “incidental to

all    courts”    to     “discipline    attorneys         who    appear       before        it.”

Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991).                            This inherent

power includes the power to suspend or disbar attorneys from

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practicing before the court.                       In re Snyder, 472 U.S. 634, 643

(1985).          Additionally,              the    Bankruptcy         Code       authorizes           the

bankruptcy court to “issue any order, process, or judgment that

is   necessary         or    appropriate           to    carry      out    the       provisions       of

[Title     11]    or    to    prevent         an    abuse      of    process.”             11   U.S.C.

§ 105(a) (2012); see In re Walters, 868 F.2d 665, 669 (4th Cir.

1989) (upholding under 11 U.S.C. § 105(a), contempt sanctions

based      on     attorney’s            failure          to   disclose          fees,        disgorge

unauthorized fees, and obtain authority to represent debtor).

We conclude that the bankruptcy court appropriately determined

that it had the authority to sanction Lewis for his misconduct.

See In re Johnson, 921 F.2d 85, 586 (5th Cir. 1991) (stating

that bankruptcy courts “have both the statutory and inherent

authority        to    deny        attorneys          and     others       the       privilege        of

practicing before that bar”).

         Lewis contends that, pursuant to Stern v. Marshall, 131
S. Ct. 2594       (2011),          bankruptcy         courts      lack       authority           over

attorney disciplinary matters.                          In Stern, the Court held that

Congress exceeded the limitation of Article III by identifying

as   a    “core    matter”         a    state-law         counterclaim          by    a    debtor     in

bankruptcy        against      a       creditor         who   had    not    consented           to    the

jurisdiction of the bankruptcy court.                          Id. at 2620.               Because the

counterclaim          was    “in       no    way   derived        from     or    dependent           upon

bankruptcy        law,”       the           Supreme       Court      determined            that      the

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bankruptcy court could not, in compliance with the Constitution,

enter a final order on that claim.                   Id. at 2618.

      We think Lewis’ situation is distinguishable.                                 The basis

upon which the bankruptcy court imposed sanctions was Lewis’

violation of bankruptcy law and procedures and his misconduct in

the   bankruptcy         court.          The       bankruptcy        court        clearly      had

jurisdiction       over    this       matter       based   on       the   fact     that     Lewis

voluntarily     presented        himself       in    the     bankruptcy          court    as    an

attorney    and    officer       of    the     court,      and      because,       unlike      the

counterclaim in Stern, the bases upon which the sanctions were

imposed    arose       from,    and    were    dependent            upon,    the    bankruptcy

proceeding.       Lewis next argues that the sanctions imposed were

in the nature of punishment and therefore amounted to criminal

contempt    and    were        imposed    in       violation        of    his     due    process

rights.    We disagree.          A contempt sanction is criminal if “it is

imposed    retrospectively for a ‘completed act of disobedience’.”

Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S.
821, 829 (1994).          Contempt sanctions are civil in nature if the

purpose    is     to    coerce    compliance          with      a    court      order     or    to

compensate another party for losses sustained.                              Id.     Suspension

of an attorney from the practice of law is generally deemed a

civil penalty, imposed to coerce compliance with the rules of

the court.      See Ex parte Wall, 107 U.S. 265, 288 (1883); In re

Liotti, 667 F.3d 419, 430-31 (4th Cir. 2011).                               We conclude that

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the    sanctions       imposed         on    Lewis     were     within      the    bankruptcy

court’s authority and that the court appropriately imposed civil

sanctions      partially          suspending          him   from      practicing        in    the

bankruptcy      court,         requiring       the    disgorgement         of    unauthorized

fees,       imposing      a     monetary       sanction,        and    conditioning          his

reinstatement upon fulfilling the sanction order.                                See Bagwell,
512 U.S. at 829.

       We    also    do     not      think    the     district      court       erred   in   its

consideration of Lewis’ appeal.                       First, Lewis’ contention that

the district court erred on appeal by not hearing oral argument

is belied by the record, which evidences that the court held a

hearing and Lewis presented argument.                         Second, we find no abuse

of    discretion       in      the    district        court’s    consideration          of   the

Appellees’ brief in the reinstatement appeal to resolve issues

in the sanctions appeal.                     See In re Haberman, 516 F.3d 1207,

1208    n.*      (10th         Cir.         2008)     (allowing        consideration          of

noncompliant         briefs          at     court’s     discretion,         provided         that

opposing      party       is    not       prejudiced);      Price     v.    Digital      Equip.

Corp., 846 F.2d 1026, 1028 (5th Cir. 1988) (same).

       Lastly, Lewis contends that the district court erred by

upholding      the     bankruptcy           court’s    ruling    where      the    bankruptcy

court did not expressly state findings of fact and conclusions

of law.        Because Lewis failed to raise this argument in the

district court, it is waived on appeal.                            See In re Wallace &

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Gale Co., 385 F.3d 820, 835 (4th Cir. 2004) (on appeal from

bankruptcy   court’s     ruling,     failure   to   raise   argument   before

district court results in waiver of argument on appeal “absent

exceptional circumstances”).

      In   sum,    we   find   no    reversible     error   by   either   the

bankruptcy court or the district court.             Accordingly, we affirm

the   district    court’s   order.     We   dispense   with   oral   argument

because the facts and legal contentions are adequately presented

in the materials before this court and argument would not aid

the decisional process.

                                                                     AFFIRMED

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