Wednesday, August 5, 2015

Frivolous Ninth Circuit Bankruptcy Appeal Results in Sanctions

Yesterday the Ninth Circuit Court of Appeals sanctioned a former ski resort developer and his bankruptcy attorney for filing a frivolous appeal.

The appeal stemmed from an unsuccessful motion to disqualify the Montana judge overseeing the developer's bankruptcy case. After the motion was denied, the developer, Timothy Blixseth, and his bankruptcy attorney, Michael Flynn, appealed to the Ninth Circuit.

The Ninth Circuit denied the appeal in 2014, and subsequently issued an order to show cause why the two shouldn't be sanctioned for filing a frivolous appeal.

Federal Rule of Appellate Procedure 38 and 27 U.S.C.  § 1927 permit imposition of sanctions against appellants and their attorneys for filing meritless appeals.

The Ninth Circuit ordered the two men to pay $500 damages each, plus reimbursement of the attorney fees and costs incurred defending against their appeal.

The Court reasoned that Blixseth failed to backup his accusations "with even a shred of credible evidence" and Flynn had a "propensity for distortion" that breached his duty of candor in dealing with the Court.

Click here to read the full order.


Michael Fuller is a partner at Olsen Daines PC in Portland, Oregon and an adjunct professor of consumer law at Lewis & Clark Law School.

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