In re Jacqueline C. Melcher

Filing 55

ORDER GRANTING 27 RENEWED MOTION TO DETERMINE AMOUNT OF SANCTIONS by Judge William Alsup. (whalc2S, COURT STAFF) (Filed on 9/30/2017) The deputy clerk hereby certifies that on October 2, 2017, a copy of this order was served by sending it via first-class mail to the address of each non-CM/ECF user listed on the Notice of Electronic Filing. Modified on 10/2/2017 (afmS, COURT STAFF).

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1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 IN RE JACQUELINE MELCHER No. C 13-04930 WHA 11 For the Northern District of California United States District Court 10 12 ORDER GRANTING RENEWED MOTION TO DETERMINE AMOUNT OF SANCTIONS 13 14 15 / 16 17 This matter stems from the bankruptcy proceedings of debtor Jacqueline Melcher. 18 Judge Ronald Whyte originally withdrew the reference to the bankruptcy court to consider the 19 Trustee’s motion for $688,000 in sanctions against debtor pursuant to Section 1927 of Title 28 20 of the United States Code. Judge Whyte granted the Trustee’s motion “to compensate the 21 victims of Ms. Melcher’s litigation abuses” but deferred calculation of the amount of sanctions 22 “because the litigation [was] ongoing and more unnecessary fees may be incurred in the future” 23 (Dkt. No. 15). Judge Whyte instructed the Trustee to move for determination of the final 24 amount of sanctions at the conclusion of debtor’s bankruptcy case. 25 The Trustee then filed a supplemental motion for sanctions that stated, “The Trustee is 26 closing the bankruptcy case and is filing the present motion for determination of the amount of 27 sanctions through September 30, 2015. The Trustee is foregoing a request for sanctions for 28 unnecessary fees caused by the Debtor after that date” (Dkt. No. 16 at 2). Judge Whyte, however, noted that “[d]ebtor ha[d] appealed the bankruptcy court’s December 10, 2015 order 1 approving interim compensation, and the Trustee ha[d] moved to dismiss that appeal for lack of 2 jurisdiction on the grounds that the bankruptcy court’s fee award [was] not yet final,” so “the 3 Trustee’s position seem[ed] to be that the fee amount that the bankruptcy court ultimately 4 approve[d was] subject to change” (Dkt. No. 25 at 2). Since Judge Whyte intended to use the 5 Trustee’s attorney’s fees “as a basis for sanctions,” he deferred ruling on the final amount of 6 sanctions “until the bankruptcy case is complete and the bankruptcy court makes a final 7 determination of the amount of attorneys’ fees to be awarded” (id. at 2–3). 8 In compliance with Judge Whyte’s order, the Trustee then filed a renewed motion to 9 determine the amount of sanctions with documentation to support the reasonableness of his attorney’s fees (see id. at 3; Dkt. No. 27). The Trustee’s renewed motion explained that “[a]ll 11 For the Northern District of California United States District Court 10 fees requested by counsel have been approved on a final basis” by the bankruptcy court (Dkt. 12 No. 27 at 2). This matter was then reassigned to the undersigned judge, along with several of 13 debtor’s pending appeals from various orders of the bankruptcy court. 14 Since debtor had missed her briefing deadline, the undersigned judge issued an order to 15 show cause why the Trustee’s motion should not be granted (Dkt. No. 32). In response to that 16 order, debtor argued that (1) the bankruptcy court’s determination regarding attorney’s fees was 17 not final because she had appealed it, (2) the Trustee’s notice of the motion mentioned an 18 inaccurate briefing deadline, and (3) she “was not allowed to participate and was denied the 19 right to object” prior to the bankruptcy court’s final approval of attorney’s fees (Dkt. No. 35). 20 The undersigned judge held a hearing on the Trustee’s renewed motion, at which debtor 21 had the chance to be heard (see Dkt. No. 49). Her pending appeals from the bankruptcy court’s 22 orders relating to attorney’s fees have been rejected. See In re Jacqueline C. Melcher, Case No. 23 3:16-cv-05982-WHA; In re Jacqueline C. Melcher, Case No. 3:16-cv-06123-WHA. There is 24 no further reason to postpone decision on the Trustee’s renewed motion. 25 The customary method for assessing an attorney’s fee application in bankruptcy cases is 26 the “lodestar” method, which multiplies the reasonable hourly rate for the services provided by 27 the number of hours reasonably expended. In re Eliapo, 468 F.3d 592, 598–99 (9th Cir. 2006). 28 The Trustee urges application of the lodestar method here (Dkt. No. 27-1 at 3). After the 2 1 hearing on the Trustee’s renewed motion, the Trustee’s attorney also submitted a declaration 2 voluntarily limiting the amount requested to the $688,000 sum originally considered by Judge 3 Whyte (Dkt. No. 54 at 2–3). The Trustee and his attorney have also explained that they 4 understand the collection of any amount of sanctions from debtor is unlikely, but they 5 nevertheless pursued a large amount in the hope that it would protect the victims of debtor’s 6 litigation misconduct by deterring further frivolous or harassing filings (see, e.g., id. at 2). 7 In the original motion considered by Judge Whyte, the Trustee’s attorney claimed hourly 8 rates ranging from $475 per hour in 2008 to $540 per hour in 2013, and approximately 1,300 9 hours related to debtor’s frivolous and vexatious conduct, amounting to a total fees request of $688,000 (Dkt. No. 1-5 at 23). This order finds that the claimed hourly rates are reasonable 11 For the Northern District of California United States District Court 10 under these circumstances. This order further finds that, given debtor’s documented history of 12 vexatious litigation, including numerous frivolous appeals, the claimed hours are likewise 13 reasonable. Moreover, any risk of excessive billing is likely neutralized by the Trustee and his 14 attorney’s voluntary waiver of costs accrued after April 30, 2013 (see Dkt. No. 1-5 at 24). This 15 order therefore concludes that $688,000 is an appropriate amount of sanctions in this case. 16 For the foregoing reasons, the Trustee’s renewed motion to determine the amount of 17 sanctions pursuant to Judge Whyte’s prior order is GRANTED in the amount of $688,000. 18 Judgment will follow. 19 20 IT IS SO ORDERED. 21 22 Dated: September 30, 2017. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 23 24 25 26 27 28 3

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