In Re Radha Ramana Murty Narumanchi et al

Filing 16

RULING affirming decision of Bankruptcy Court. Signed by Judge Alvin W. Thompson on 03/28/2012. (Giering, A)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
------------------------------x
In re:
:
:
RADHA RAMANA MURTY NARUMANCHI :
and RADHA BHAVATARINI DEV
:
NARUMANCHI,
:
:
Debtors.
:
------------------------------x
RADHA RAMANA MURTY NARUMANCHI,:
:
Appellant,
:
v.
:
:
WAFEEK ABDELSAYED,
:
:
Appellee.
:
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Bankruptcy Petition #:
3:97BK31791(ASD)

Civ. No. 3:11CV01127(AWT)

RULING ON BANKRUPTCY APPEAL
Radha Ramana Murty Narumanchi (“Narumanchi”) has appealed
from an order entered by the United States Bankruptcy Court for
the District of Connecticut (the “Bankruptcy Court”) on June 16,
2011, denying his motion for sanctions.

Narumanchi contends that

the Bankruptcy Court abused its discretion in denying his motion
for sanctions and in not referring the case to the United States
Attorney for criminal prosecution.

For the reasons set forth

below, the Bankruptcy Court’s decision is being affirmed.
I.

FACTUAL AND PROCEDURAL BACKGROUND
On May 2, 1997, Narumanchi and Radha Bhavatarini Dev

Narumanchi submitted a voluntary petition for bankruptcy under
Chapter 7 of Title 11 of the United States Code.

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The U.S.

Trustee reported that the case was a no-asset case, and on
September 12, 1997, the Bankruptcy Court entered an order
discharging the debtors.

The case was closed on August 24, 1999.

The case was reopened on June 10, 2008 on the debtors’
motion in light of newly discovered assets from a class action
settlement.

On March 4, 2009, appellee Wafeek Abdelsayed

(“Abdelsayed”), through his attorney, Brian Gildea (“Gildea”),
filed a proof of claim for $18,000 owed from a previously
obtained judgment against Narumanchi in Connecticut Superior
Court.
On May 13, 2009, Narumanchi, through his attorney, Stephen
I. Small (“Small”), filed an objection to Abdelsayed’s claim.
Narumanchi objected on the basis that Abdelsayed had already
received at least the amount of the civil judgment from William
Hill (“Hill”), the attorney who represented Abdelsayed in that
proceeding, in settlement of a prospective legal malpractice
claim against Hill.

On February 4, 2010, Small sent a letter to

Gildea stating:
I have received documentation from the
Statewide Grievance Committee that William E.
Hill, Esq. paid your clients’ claim in full
almost 10 years ago. This would indicate that
your client’s sworn proof of claim was
fraudulent and was submitted with malice.
I ask that your client immediately withdraw
its proof of claim with prejudice. My client
has asked that I move for sanctions in the
event that this matter is not immediately
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resolved.
(Narumanchi’s Appellate Br., Volume 2: Ex. J-11).
On September 2, 2010 the Bankruptcy Court held a hearing on
Narumanchi’s objection to Abdelsayed’s proof of claim.
Abdelsayed did not appear at the hearing, and the Bankruptcy
Court sustained Narumanchi’s objection and disallowed
Abdelsayed’s claim in full.
On October 21, 2010, Abdelsayed filed a pro se motion to
vacate the order sustaining Narumanchi’s objection.

Abdelsayed

contended that Gildea had failed to notify him of the hearing,
his non-appearance, and the subsequent order disallowing his
claim.
On November 2, 2010, Small filed an objection to the motion
to vacate on behalf of Narumanchi.

The Bankruptcy Court held a

hearing on the motion to vacate on February 28, 2011.
With regard to Abdelsayed’s non-appearance at the September
2, 2010 hearing, the Bankruptcy Judge identified a “confusing
situation, which resulted in a hearing that was scheduled for on
or about July 14th and continued to the 21st, and at that point,
Judge Weil deciding to transfer the matter to me, and ultimately,
by setting it up for September 2nd.”
Br., Volume 2: Ex. 26 at 93).

(Narumanchi’s Appellate

However, the Bankruptcy Judge

determined that this confusion did not excuse Gildea from keeping
himself apprised of the hearing date:
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But in light of the confusion, which confused
–- would have been confusing to all parties
and indeed was initially confusing to the
Court, both attorneys should have kept
themselves apprised of the hearing date, and
both of them could have easily done so.
Attorney Gildea did not. He was counsel for
Dr.
Abdelsayed
at
that
time,
and
the
deficiencies of the attorney are unfortunately
from time to time visited on the client.
The motion to vacate is therefore denied. . .
. this was a confusing situation, and quite
frankly, during the course of this hearing, I
gave serious consideration to granting the
motion to vacate.
(Id. at 93-94).

Ruling from the bench, the Bankruptcy Judge

denied Abdelsayed’s motion to vacate and on March 15, 2011
entered an order to that effect.
On May 26, 2011, Narumanchi filed a pro se motion for
sanctions.

Narumanchi argued that the Bankruptcy Court should

impose sanctions on Gildea and Abdelsayed, pursuant to Fed. R.
Bankr. P. 9011 (“Rule 9011"), 11 U.S.C. § 105(a) and 28 U.S.C.
§ 1927, based on the proof of claim filed by Gildea on March 4,
2009 and the pro se motion to vacate filed by Abdelsayed on
October 21, 2010.

Narumanchi also requested that the Bankruptcy

Court consider referring the case to the United States Attorney
for criminal prosecution pursuant to 18 U.S.C. § 3057.
Rule 9011 authorizes sanctions for signing certain documents
not “well grounded in fact and . . . warranted by existing law or
a good faith argument for the extension, modification, or
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reversal of existing law.”

Fed. R. Bankr. P. 9011.

“Rule 9011

parallels Federal Rule of Civil Procedure 11, containing only
such modifications as are appropriate in bankruptcy matters . .
.”

In re Highgate Equities, Ltd., 279 F.3d 148, 151 (2d Cir.

2002) (citing In re Cohoes Indus. Terminal, 931 F.2d 222, 227 (2d
Cir. 1991)).
Rule 9011(b) provides:
By presenting to the court (whether by
signing,
filing,
submitting,
or
later
advocating) a petition, pleading, written
motion, or other paper, an attorney or
unrepresented party is certifying that to the
best of the person’s knowledge, information,
and belief, formed after an inquiry reasonable
under the circumstances,-(1) it is not being presented for any improper
purpose, such as to harass or to cause
unnecessary delay or needless increase in the
cost of litigation;
(2) the claims, defenses, and other legal
contentions therein are warranted by existing
law or by a nonfrivolous argument for the
extension,
modification,
or reversal
of
existing law or the establishment of new law;
(3)
the
allegations
and
other
factual
contentions have evidentiary support or, if
specifically so identified, are likely to have
evidentiary support or, if specifically so
identified, are likely to have evidentiary
support after a reasonable opportunity for
further investigation or discovery; and
(4) the denials of factual contentions are
warranted on the evidence or, if specifically
so identified, are reasonably based on a lack
of information or belief.
Fed. R. Bankr. P. 9011(b).

Rule 9011(c) further provides that,

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“[i]f, after notice and a reasonable opportunity to respond, the
court determines that subdivision (b) has been violated, the
court may, subject to the conditions stated below, impose an
appropriate sanction upon the attorneys, law firms, or parties
that have violated subdivision (b) or are responsible for the
violation.”

Fed. R. Bankr. P. 9011(c).

On June 16, 2011, the Bankruptcy Judge held a hearing on the
motion for sanctions.

The attorney for the appellee, Attorney

Fish, argued that the motion for sanctions should be denied on
procedural grounds because the 21-day safe harbor period of Rule
9011 had not run before the motion for sanctions was filed.

Rule

9011(c) sets forth the requirements of this safe harbor:
[A] motion for sanctions under this rule shall
be made separately from other motions or
requests and shall describe the specific
conduct alleged to violate [Rule 9011(b)]. . .
. The motion for sanctions may not be filed
with or presented to the court unless, within
21 days after service of the motion (or such
other period as the court may prescribe), the
challenged paper, claim, defense, contention,
allegation, or denial is not withdrawn or
appropriately corrected. . . .
Fed. R. Bankr. P. 9011(c)(1)(A).

This provision was added to

Rule 9011 in 1997, and is analogous to the safe harbor provision
added to Federal Rule of Civil Procedure 11 in 1993.

See Fed. R.

Civ. P. 11 advisory committee note (1993).
The Bankruptcy Judge agreed with the appellee’s argument

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that as no evidence had been presented showing that Narumanchi
complied with the safe harbor provision by serving a copy of his
motion on Abdelsayed or his attorney before filing it with the
Bankruptcy Court, the Bankruptcy Court should decline to enter
sanctions.
The Judge ruled from the bench:
I find that [Attorney Fish’s] recitation and
review of the facts is consistent with my
recollection. I find that his application of
the law is consistent with my knowledge of the
law
and
review
of
the
facts.
And
consequently, for the reasons stated by
Attorney Fish on the record, which I adopt,
the motion should be and is denied.
Now, in addition, he did not directly address
–- in fact, I’m not sure he addressed at all
the question of the referral, a criminal
referral, so to speak, to the Office of the
United States Attorney as has been requested.
As a former United States attorney for
Connecticut and someone who spent some in
excess of 20 years in that office, and as a
judge, I was –- I met, with great interest
initially when I saw my obligation and as
further amended during the course of time I
was a judge, as to my obligations to bring to
the attention of the appropriate authorities,
including specifically, the United States
Attorney, potential violations of –- of
criminal law. And I find no basis to do that
here.
So consequently, the motion, for the reasons
stated by Mr. Fish on the record insofar as it
requested compensation, attorney’s fees and
costs and monetary sanctions, punitive or
otherwise, is denied. And for my own reasons,
because of my own familiarity with the facts
of the matter and because I find no basis for
this Court to make a referral to the U.S.
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Attorney, I decline to do that as well.
the motion is denied in all respects.

So

And by the way, with regard to the motion to
refer the matter to the U.S. Attorney, I think
I have an independent obligation to do that
anyway, which I decline to exercise because I
don’t think there’s –- it’s appropriate to do
so. The motion is denied in its entirety. So
ordered.
(Hr’g Tr. 6/16/11, 33-35).
II.

STANDARD OF REVIEW
This court “may affirm, modify, or reverse” the Bankruptcy

Court’s judgment, or “remand with instructions for further
proceedings.”

Fed. R. Bankr. P. 8013.

legal conclusions are reviewed de novo.

The Bankruptcy Court’s
Denton v. Hyman (In re

Hyman), 502 F.3d 61, 65 (2d Cir. 2006); Educ. Credit Mgmt. Corp.
v. Curiston, 351 B.R. 22, 27 (D. Conn. 2006).

Findings of fact

are not to be set aside unless they are “clearly erroneous.”
Fed. R. Bankr. P. 8013.
reviewed de novo.

Mixed questions of law and fact are

In re Jackson, 394 B.R. 8, 12 n. 2 (D. Conn.

2008) (quoting Babit v. Vebeliunas (In re Vebeliunas), 332 F.3d
85, 90 (2d Cir. 2003) (“Mixed questions of law and fact are
subject to de novo review.”)).
“A bankruptcy court’s decision regarding an award of
sanctions is subject to review for an abuse of discretion.”
Hawkins v. Levine, 426 B.R. 36, 40 (N.D.N.Y. 2010) (citation
omitted).

See also Cooter & Gell v. Hartmarx Corp., 496 U.S.

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384, 405 (1990) (Rule 11 sanctions are subject to review for
abuse of discretion).
III. DISCUSSION
A.

Fed. R. Bankr. P. 9011

The Bankruptcy Judge held that Narumanchi had failed to
comply with the safe harbor requirement of Rule 9011 and Fed. R.
Civ. P. 11 and that this was a basis for denying Narumanchi’s
motion for sanctions.
The safe harbor provision “is a mandatory procedural
prerequisite for seeking sanctions under the rule and sanctions
imposed without compliance with this provision are subject to
reversal.”

In re Kelsey, Nos. 94-10415, 00-1034, 2001 WL

34050741, at *3 (Bankr. D. Vt. Oct. 23, 2001).

See Hadges v.

Yonkers Racing Corp., 48 F.3d 1320, 1327–29 (2d Cir. 1995)
(reversing district court's imposition of sanctions under
corresponding provision of Fed. R. Civ. P. 11(c)(1)(A) where
movant provided no evidence indicating it had served respondent
with the motion for sanctions at least 21 days prior to filing it
with the court).
The procedural safeguards afforded by the safe harbor
provision of Rule 9011 “are intended to reduce the number of
motions for sanctions and to provide opportunities for parties to
avoid sanctions altogether.”

Perpetual Secs., Inc. v. Tang, 290

F.3d 132, 141 (2d Cir. 2002) (citing Hadges, 48 F.3d at 1327).

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See also In re Galgano, 358 B.R. 90, 93 (Bankr. S.D.N.Y. 2007)
(“The safe-harbor provision in Rule 9011 is crucial because it
gives a moving party an opportunity to avert sanctions by
withdrawing a motion that lacks merit or an appropriate legal or
factual basis.”); 51 Charles A. Wright & Arthur R. Miller,
Federal Practice and Procedure § 1337.2 (3d ed. 2004) (“Since the
procedural requirements of the Rule 11 safe harbor provision are
designed to protect the person against whom sanctions are sought
and forestall unnecessary motion practice, a failure to comply
with them will result in the rejection of the motion for
sanctions . . . .”).
At the hearing on Narumanchi’s motion for sanctions,
Attorney Fish argued that Narumanchi never sent a copy of a
motion for sanctions to Abdelsayed and Gildea and therefore did
not comply with Rule 9011(c).

Here, the record does not show

that Narumanchi served his motion for sanctions on Gildea or
Abdelsayed 21 days before filing it on May 26, 2011.

This

oversight is critical because if Narumanchi had provided notice
under Rule 9011(c), Gildea might have revised or withdrawn his
proof of claim or Abdelsayed might have revised or withdrawn his
pro se motion to vacate, obviating the need for a hearing and an
order from the Bankruptcy Court on each filing.

This is the very

purpose that the rule was designed to accomplish.
Narumanchi claims that the letter that Small sent to Gildea
on February 4, 2010 complied with the safe harbor provision of
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Rule 9011.

However, under Rule 9011(c), the movant must send the

respondent a copy of his motion for sanctions at least 21 days
before filing the motion.

See In re Pratt, 524 F.3d 580, 588

(5th Cir. 2008) (“We are not persuaded that informal service is
sufficient to satisfy the service requirement of Rule 9011. . . .
[T]he plain language of Rule 9011 mandates that the movant serve
the respondent with a copy of the motion before filing it with
the court.”); In re Cultrera, Bankruptcy No. 03-22323, Adversary
No. 06-2042, 2007 WL 1891482, at *2 (Bankr. D. Conn. June 29,
2007) (“[I]nformal notice of a potential violation is
insufficient to trigger the beginning of the twenty-one day safe
harbor period.”) (citing Wright & Miller, supra, § 1337.2).
Courts in this circuit have frequently denied motions for
sanctions in the bankruptcy context because the movant failed to
comply with the safe harbor requirements of Rule 9011(c).

See,

e.g., In re Taub, 439 B.R. 276, 283 (Bankr. E.D.N.Y. 2010)
(“Here, the record does not show that the Debtor served this
motion on the Trustee twenty-one days before filing it on
September 7, 2010.

That is, the Debtor did not comply with the

safe harbor provision of Rule 9011.

For this reason alone, the

Debtor’s request for sanctions under Rule 9011 must be denied.”);
Galgano, 358 B.R. 90 (denying sanctions under Rule 9011 for
failure to serve respondent with motion for sanctions at least 21
days before filing); Obuchowski v. Poulin Grain, Inc. (In re
Stevens), No. 98-1181, 99-01040, 2001 WL 34093946 (Bankr. D. Vt.
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Jan. 17, 2001) (same).

In this case, where Narumanchi, through

his counsel, sent a letter to creditor’s counsel requesting that
he withdraw a proof of claim but did not send the creditor or his
counsel a copy of the motion for sanctions, Narumanchi has not
complied with the “mandatory procedural prerequisite” required by
the safe harbor provision of Rule 9011(c).

Therefore, the

Bankruptcy Court did not err in denying the motion for sanctions
on this ground.
Moreover, even if Narumanchi had complied with Rule 9011's
safe harbor provision, the record shows that he has not
established that Gildea’s proof of claim or Abdelsayed’s motion
to vacate are sanctionable under Rule 9011.
An award of sanctions will lie “when it appears that a
competent attorney could not form the requisite reasonable belief
as to the validity of what is asserted in the paper.”
Thompson, 803 F.2d 1265, 1274 (2d Cir. 1986).

Oliveri v.

See also Ball v.

A.O. Smith Corp., 451 F.3d 66, 70 (2d Cir. 2006) (indicating that
“Rule 11(b) is violated when an attorney presents a pleading for
an improper purpose or presents a frivolous claim or legal
contention. . . .”).

Ultimately, the standard requires a finding

of objective unreasonableness of the individual making the
statement in the pleading.

See Margo v. Weiss, 213 F.3d 55, 65

(2d Cir. 2000).
“[C]ourts have generally held that imposition of sanctions
under Rule 9011 requires a showing of bad faith based on
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objective standards.”
S.D.N.Y. 2002).

In re Gorshtein, 285 B.R. 118, 125 (Bankr.

“In order for sanctions to be supported under

this test, it must be clear that the motion made has no chance of
success under the existing circumstances.”

Id. (citing In re

Spectee Grp., Inc., 185 B.R. 146, 159 (Bankr. S.D.N.Y. 1995)).
With respect to the proof of claim that Gildea filed on
March 4, 2009, Abdelsayed has identified a legitimate basis for
prosecuting the proof of claim.

In particular, although Hill had

paid Abdelsayed $23,000 in settlement of a prospective
malpractice claim, that “second payment source” was not “dollar
for dollar the same” as the amount that Narumanchi owed Adelsayed
from the civil judgment entered against Narumanchi.
6/16/11 at 21).

(Hr’g Tr.

Attorney Fish argued before the Bankruptcy Court

that Abdelsayed and Gildea determined “that these dollars that
are coming in [from the malpractice settlement], we’re going to
allocate them to, not principal in the first instance, but the
other ancillary things which made up the underlying malpractice
settlement.

And so there was a complicated issue as to how you

do the calculation.”

(Id.).

Attorney Fish also noted at the

hearing that “there were also settlement discussions back and
forth between Attorney Small and Attorney Gildea that
[Abdelsayed] was aware of as to how to resolve the proof of
claim.”

(Id. at 23).

Attorney Fish argued the existing

settlement discussions suggest that the proof of claim was
prosecuted in good faith.
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With respect to Abdelsayed’s pro se motion to vacate, at the
hearing on the motion to vacate the Bankruptcy Judge identified a
“confusing situation” surrounding the scheduling of the September
2, 2010 hearing at which Abdelsayed failed to appear.

The

Bankruptcy Judge noted that “this was a confusing situation, and
quite frankly, during the course of this hearing, I gave serious
consideration to granting the motion to vacate.”

(Id. at 93-94).

Considering the Bankruptcy Judge’s comments at the hearing,
it is far from clear that the motion to vacate had “no chance of
success under the existing circumstances.”
B.R. 118, 125 (Bankr. S.D.N.Y. 2002).

In re Gorshtein, 285

In light of the foregoing,

the Bankruptcy Judge’s decision not to exercise his discretion to
impose sanctions was not clearly erroneous.
B.

11 U.S.C. § 105(a)

11 U.S.C. § 105(a) states that: “The court may issue any
order, process, or judgment that is necessary or appropriate to
carry out the provisions of this title.”

11 U.S.C. § 105(a).

The Second Circuit has “long recognized that section 105(a)
limits the bankruptcy court’s equitable powers, which must and
can only be exercised within the confines of the Bankruptcy
Code.”

In re Kalikow, 602 F.3d 83, 96 (2d Cir. 2010).

“Thus,

§ 105 does not itself create a private right of action, but a
court may invoke § 105(a) if the equitable remedy utilized is
demonstrably necessary to preserve a right elsewhere provided in

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the Code.”

Id. (citing Bessette v. Auto Fin. Srvcs, Inc., 230

F.3d 439, 444-45 (1st Cir. 2000).

“The equitable power conferred

on the bankruptcy court by section 105(a) is the power to
exercise equity in carrying out the provisions of the Bankruptcy
Code, rather than to further the purposes of the Code generally,
or otherwise to do the right thing.

This language ‘suggests that

an exercise of section 105 power be tied to another Bankruptcy
Code section and not merely to a general bankruptcy concept or
objective.’ ”

In re Dairy Mart Convenience Stores, Inc., 351

F.3d 86, 92 (2003) (citing 2 Collier on Bankruptcy ¶ 105.01[1]).
Therefore, § 105 does not create a private right of action
nor provide any independent substantive right.

Insofar as

Narumanchi moved the Bankruptcy Court to impose sanctions under
§ 105, the analysis of the motion for sanctions under Rule 9011
applies.
C.

28 U.S.C. § 1927

Section 1927 states that: “Any attorney or other person
admitted to conduct cases in any court of the United States . . .
who so multiplies the proceedings in any case unreasonably and
vexatiously may be required by the court to satisfy personally
the excess costs, expenses, and attorneys’ fees reasonably
incurred because of such conduct.”

28 U.S.C. § 1927 (2006).

“Imposition of sanction under § 1927 requires a ‘clear showing of
bad faith.’ ”

Olivieri v. Thompson, 803 F.2d 1265, 1273 (2d Cir.

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1986).

“[A]n award under [section] 1927 is proper when the

attorney’s actions are so completely without merit as to require
the conclusion that they must have been undertaken for some
improper purpose such as delay.”

State Street Bank & Trust Co.

v. Interversiones Errazuriz Limitada, 374 F.3d 158, 180 (2d Cir.
2004).

For the reasons stated above, there is no clear showing

here of bad faith or improper purpose.
D. Referral to the U.S. Attorney’s Office
Narumanchi’s motion also requested a referral to the United
States Attorney pursuant to 18 U.S.C. § 3057, which states, in
relevant part:
Any judge . . . having reasonable grounds for
believing that any violation under chapter 9
of this title or other laws of the United
States
relating
to
insolvent
debtors,
receiverships or reorganization plans has been
committed, or that an investigation should be
had in connection therewith, shall report to
the appropriate United States attorney all the
facts and circumstances of the case, the names
of the witnesses and the offense or offenses
believed to have been committed.”
18 U.S.C. § 3057(a).

Under this statute, “a court is compelled

to direct the United States Attorney to investigate the facts
whenever reasonable grounds exist for a belief that a violation
of the bankruptcy laws has occurred and that such violations have
not been litigated before the bankruptcy and appellate courts.”
In re Parr, 13 B.R. 1010, 1020 (E.D.N.Y. 1981).

At least one

court has held that creditors in bankruptcy cases do not have a
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legally cognizable right to request that the Bankruptcy Court
make a report to the U.S. Attorney’s Office under 18 U.S.C.
§ 3057(a).

See In re Valentine, 196 B.R. 386, 387 (Bankr. E.D.

Mich. 1996).

In fact, in his motion for sanctions Narumanchi

made the following concession:
While I am fully aware that, as a Debtor, I
have no private right of action, or may even
have a right to directly request this court to
make a referral of criminal acts that have
been committed by attorney Gildea, and the
alleged
Creditor,
Abdelsayed,
either
individually or as co-conspirators; and also
while this Court is not empowered to exercise
jurisdiction in criminal matters per se . . .
nevertheless I believe that on its own
volition this honorable court could and would
like to exercise its discretion, to report all
the facts and circumstances of the case, the
names of the witnesses and the offense(s)
believed to have been committed, pursuant to
18 U.S.C. Sec. 3057, to U.S. Attorney for
further investigation and proceedings on such
criminal matters and criminal viola[t]ions.
(Narumanchi’s 5/26/11 Br. (Doc. No. 85 in Bankruptcy Petition
#:97-31791) at 4).
At the hearing on the motion for sanctions, the Bankruptcy
Judge exercised his discretion in declining to make a criminal
referral to the U.S. Attorney:
As a former United States attorney for
Connecticut and someone who spent in excess of
20 years in that office, and as a judge, I was
–- I met, with great interest initially when I
saw my obligation and as further amended
during the course of the time I was a judge,
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as to my obligations to bring to the attention
of the appropriate authorities, including
specifically, the United States Attorney,
potential violations of –- of criminal law.
And I find no basis to do that here.
(Hr’g Tr. 6/16/11 at 34).

Later, the Bankruptcy Judge noted that

“with regard to the motion to refer the matter to the U.S.
Attorney, I think I have an independent obligation to do that
anyway, which I decline to exercise because I don’t think there’s
–- it’s appropriate to do so.”

(Id. at 35).

The Bankruptcy Judge who presided over the sanctions hearing
had also presided over hearings on Narumanchi’s objection to the
proof of claim and on Abdelsayed’s motion to vacate, was
intimately familiar with the parties and issues involved, was
very familiar with his obligations under 18 U.S.C. § 3057, and
was in the best position to determine whether reasonable grounds
existed for a belief that a violation of the bankruptcy laws had
occurred.

As there are insufficient grounds to determine that

the proof of claim or the motion to vacate were frivolous or
filed for any improper purpose, and in light of the foregoing,
the court concludes that the Bankruptcy Judge did not err in
exercising his discretion to not refer the case to the United
States attorney for criminal prosecution.
V.

CONCLUSION
For the reasons set forth above, the decision of the

Bankruptcy Court is AFFIRMED.
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The Clerk shall close this case.
It is so ordered.
Dated this 28th day of March, 2012 at Hartford, Connecticut.

/s/
Alvin W. Thompson
United States District Judge

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