Court Opinion

ID: 868354
Source: CourtListenerOpinion
Date Created: 2013-05-21 00:00:59.324665+00
Date Added: 2024-06-11T09:57:11.733114
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             MAY 20 2013

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

In re: BLUE PINE GROUP, INC.,                    No. 11-60059

              Debtor,                            BAP No. 10-1412

DAVID J. WINTERTON; DAVID J.                     MEMORANDUM *
WINTERTON & ASSOCIATES, LTD.,

              Appellants,

  v.

BLUE PINE GROUP, INC.; HUMITECH
OF NORTHERN NEVADA
CALIFORNIA, LLC; JOHN PINK; US
TRUSTEE,

              Appellees.

                           Appeal from the Ninth Circuit
                            Bankruptcy Appellate Panel
            Hollowell, Jury, and Johnson, Bankruptcy Judges, Presiding

                        Argued and Submitted May 7, 2013
                            San Francisco, California

Before: W. FLETCHER, GOULD, and CHRISTEN, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      Appellants David Winterton and David J. Winterton & Associates, Ltd.,

(“Winterton”) appeal from the judgment of the Bankruptcy Appellate Panel

(“BAP”) imposing sanctions against Winterton based on his work in a bankruptcy

case. We have jurisdiction under 28 U.S.C. § 158(d), and we review decisions of

the bankruptcy court independently without deference to the BAP’s conclusions.

In re Su, 290 F.3d 1140, 1142 (9th Cir. 2002). We affirm the bankruptcy court’s

decision to impose sanctions but reduce the sanction award to $11,000.

      A bankruptcy court may impose sanctions under Bankruptcy Rule 9011

when it finds that a filing is frivolous. Marsch v. Marsch (In re Marsch), 36 F.3d
825, 829 (9th Cir. 1994) (per curiam). A petition is frivolous if it is “both baseless

and made without a reasonable and competent inquiry.” In re Grantham Bros.,

922 F.2d 1438, 1442 (9th Cir. 1991) (internal quotation marks omitted). The

record shows that Winterton filed and continued to pursue a bankruptcy petition

without adequate investigation that it was legitimate, even after he was put on

notice that his clients lacked authority to file. The bankruptcy court did not abuse

its discretion by imposing sanctions under Rule 9011. See Fed. R. Bankr. P.

9011(b), (c)(1)(A). We conclude that the decision to sanction Winterton cannot be

said to be illogical, implausible, or without support of inferences that may be

drawn from facts in the record. See United States v. Hinkson, 585 F.3d 1247, 1251

(9th Cir. 2009).
      The bankruptcy court entered an award of sanctions in the amount of

$109,528, the actual costs shown by Appellees’ billing records to be attributable to

Winterton’s improper conduct. Rule 9011 provides that sanctions “shall be limited

to what is sufficient to deter repetition of such conduct or comparable conduct by

others similarly situated.” Fed. R. Bankr. P. 9011(c)(2). Moreover, a bankruptcy

court should “apply the general rule that sanctions are to be allocated between

counsel and client according to their relative culpability.” In re Rainbow

Magazine, Inc., 136 B.R. 545, 554 (B.A.P. 9th Cir. 1992). Under that rule, “the

debtor must bear much of the responsibility.” Id. at 555. Here, however, the

bankruptcy court sanctioned only Winterton, even though his error stemmed in part

from his reliance on the debtor and debtor’s litigation and corporate counsel.

Because the sanction imposed is more than sufficient to deter similar conduct by

others and Winterton’s culpability is limited by that of the debtor, we reduce the

sanction against Winterton from $109,528 to $11,000. The remainder is vacated.

      AFFIRMED and VACATED.