FILED
NOT FOR PUBLICATION
NOV 29 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: TRISHA AINNE VIZCONDE, No. 16-60072
Debtor, BAP No. 15-1384
------------------------------
MEMORANDUM*
TRISHA AINNE VIZCONDE;
TIMOTHY MCCANDLESS, Attorney,
Appellants,
v.
DAVID BURCHARD, Chapter 13 Trustee
Appellee.
In re: ROSARIO M. CARRERA, No. 16-60073
Debtor, BAP No. 15-1383
______________________________
TIMOTHY L. MCCANDLESS, Attorney,
Appellant,
v.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
DAVID BURCHARD, Chapter 13
Trustee,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Kirscher, Jury, and Taylor, Bankruptcy Judges, Presiding
Submitted November 15, 2017**
San Francisco, California
Before: THOMAS, Chief Judge, and W. FLETCHER and PAEZ, Circuit Judges.
Timothy L. McCandless appeals from the Bankruptcy Appellate Panel’s
(“BAP”) judgment affirming the bankruptcy court’s award of sanctions. The
bankruptcy court imposed monetary sanctions against McCandless for filing
improper bankruptcy petitions on behalf of Trisha Ainne Vizconde and Rosario M.
Carrera. We review for abuse of discretion a bankruptcy court’s award of
sanctions. Miller v. Cardinale (In re DeVille), 361 F.3d 539, 547 (9th Cir. 2004).
We have jurisdiction under 28 U.S.C. § 158(d)(1), and we affirm.
The BAP correctly concluded that the bankruptcy court imposed sanctions
on McCandless under Federal Rule of Bankruptcy Procedure 9011. Although the
bankruptcy court did not specify the basis for imposing sanctions, “we can deduce
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
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the source of its power for the purposes of our review.” Primus Automotive Fin.
Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997).
Rule 9011(c) allows for the imposition of sanctions if a bankruptcy petition
or other document is filed for an improper purpose. Fed. R. Bankr. P. 9011(b)(1).
Typically, Rule 9011, which is drawn from Federal Rule of Civil Procedure 11, is
governed by a reasonableness standard. See DeVille, 361 F.3d at 550 n.5; Zaldivar
v. City of Los Angeles, 780 F.2d 823, 829 (9th Cir. 1986), abrogated on other
grounds, Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 399–400 (1990).
However, in instances where the bankruptcy court acts sua sponte, we have
required a heightened standard for imposing sanctions. Specifically, sua sponte
sanctions are “imposed only in situations that are akin to contempt of court.”
United Nat. Ins. Co. v. R&D Latex Corp., 242 F.3d 1102, 1116 (9th Cir. 2001)
(emphasis removed). As the BAP noted, the “akin to contempt” standard likely
does not apply in these cases, as the sanctions were imposed for the filing of the
petitions. This situation appears to be covered by the Rule 9011(c)(1)(A)
exception. We need not decide this issue, however, as the bankruptcy court’s
findings support the sanctions against McCandless even under the higher “akin to
contempt” standard.
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The bankruptcy court found that McCandless “knowingly and willfully
participated in and facilitated the abuse and bad faith manipulation of the
bankruptcy process” by filing bankruptcy petitions on behalf of both Vizconde and
Carrera. The record supports this determination as both petitioners failed to
disclose prior bankruptcies they had filed, McCandless informed the court that the
petitions were filed to invoke the automatic stay to delay impending foreclosures,
and McCandless failed to file a host of required documents in each case. In light
of this conduct we agree with the BAP that McCandless’s actions meet even the
higher “akin to contempt” standard.
The bankruptcy court also complied with Rule 9011’s procedural and other
requirements. Sanctions must 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). The bankruptcy court did not abuse its discretion by sanctioning
McCandless $2,000 in each case, as these were moderate amounts clearly aimed at
deterrence rather than punishment. Sua sponte monetary sanctions under Rule
9011 are limited to a penalty payable to the court, and here the sanctions were
ordered payable to the court. Id.
Additionally, Rule 9011(c)(1)(B) requires that before a court may impose
sanctions the attorney or party must be provided with notice of the offending
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conduct and an opportunity to be heard. McCandless argues that because the
sanctions were “penalties,” he was entitled to greater procedural safeguards. We
have held, however, that under Rule 9011 adequate notice and an opportunity to be
heard is all the process required. See DeVille, 361 F.3d at 552–53. Before
imposing sanctions, the bankruptcy court issued orders to show cause in both
cases, providing McCandless with notice of his improper acts and an opportunity
to respond, and informing him that sanctions may be imposed. As directed,
McCandless filed written responses and attended a hearing in each case at which he
argued against sanctions. The bankruptcy court provided McCandless with the
procedural protections required by Rule 9011.
AFFIRMED.
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