Robinson et al v. Steward
MEMORANDUM: Based upon the foregoing, the bankruptcy court's Judgment and Amended Memorandum Opinion and Order imposing sanctions on Appellants is affirmed.. Signed by District Judge Rodney W. Sippel on 3/31/15. (LGK)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
JAMES C. ROBINSON,
CRITIQUE SERVICES LLC, and
ELBERT A. WALTON, JR.,
Case No. 4:14 CV 1094 RWS
Bankruptcy Case No. 11-46399-705
Appellants in this matter were sanctioned by the bankruptcy court1 in the
underlying bankruptcy case. Appellants have filed an appeal in this Court seeking
to overturn the bankruptcy court’s judgment and sanctions. After a review of the
briefs and the record in this matter I find that the bankruptcy court had the authority
and sound reasons for imposing its judgment and sanctions against Appellants. As
a result, I will affirm the bankruptcy court’s judgment and order.
The events underlying this appeal are clearly and extensively recorded in the
bankruptcy court’s Amended Memorandum Opinion and Order dated June 11,
An abbreviated version of events which is taken from that order and from
the record before the bankruptcy court submitted in this appeal reveals the
Appellant James C. Robinson is a longtime practitioner in the United States
Bankruptcy Court for the Eastern District of Missouri. Robinson has an affiliation
with Appellant Critique Services L.L.C. (Critique). Robinson / Critique’s
bankruptcy practice is based on the low-cost / high volume representation of
individuals before the bankruptcy court. Robinson has represented in bankruptcy
court documents that he does business as / practices law as Critique. However, it is
unclear from the record before the bankruptcy court whether Critique is a legal or
fictional entity. It is also unclear who owns or has an ownership interest in
Critique, what services Critique provides to Robinson’s clients, and what other
attorneys, if any, are employed by Critique. In the proceedings in this case, the
bankruptcy court relied on Robinson’s representations that Critique was the d/b/a of
Robinson. The issue of the legal nature and identity of Critique was important in
United States Bankruptcy Judge Charles E. Rendlen, III.
the bankruptcy court proceedings because Critique employees helped Appellee /
Debtor LaToya Steward prepare her bankruptcy filings and received fees from
Steward. The bankruptcy court stated in its sanctions order at issue that the
monetary sanctions he imposed on Robinson and Critique are imposed jointly and
severally upon these parties in the event that they are not the same entity as has
been represented by Robinson.
Appellee Steward is the debtor in the underlying bankruptcy case. In 2010,
she engaged Robinson to represent her in filing for bankruptcy relief under Chapter
7 of the United States Bankruptcy Code. To initiate her bankruptcy case, Steward
made several visits to Critique’s office and met with Critique staff members to pay
fees and complete paperwork. The bankruptcy court found in its Amended
Memorandum and Opinion and Order, dated June 11, 2015, that Critique staff
members solicited Steward to include false information in her petition papers (a
false address and fictional dependents). Robinson was made aware of at least
some of these false representations but failed to correct them. Steward’s petition
was filed with the bankruptcy court on June 17, 2011. Steward signed her petition
papers at the pages tabbed by Critique for signature. However, she did not read
her petition papers and did not discover the false statements in her papers until she
reviewed her papers with new counsel in 2013.
The bankruptcy court found that Robinson and Critique were highly
unprofessional in their representation of Steward in addition to soliciting and
including false information in her petition papers: (1 ) Robinson and Critique failed
to communicate with Steward; (2) they improperly maintained her file; and (3) they
abandoned Steward in her efforts to rescind a reaffirmation agreement that she had
entered with Ford Motor Credit.
As a direct result of not rescinding the reaffirmation agreement, Steward
surrendered her vehicle and remained obligated on the debt to Ford Motor Credit.
On December 4, 2012, Steward filed a pro se complaint against Ford Motor
Credit in an adversary proceeding in her bankruptcy case. She claimed her debt
should be discharged based on Robinson and Critique’s failure to represent her in
her effort to rescind the reaffirmation agreement. Robinson received an electronic
notice of this action. Ford Motor Credit moved to dismiss arguing that the
professional negligence of Robinson and Critique could not be the grounds for
Steward’s debt to Ford Motor Credit to be discharged. At the hearing of the
motion, Steward made an oral motion to substitute Robinson and Critique for Ford
Motor Credit. The bankruptcy court ultimately entered an order granting the
motion to dismiss, denying Steward’s motion to substitute parties, but granting
Steward fourteen days to file whatever pleadings she deemed appropriate against
Robinson and Critique.
Steward filed an amended complaint in the adversary proceeding against
Robinson and Critique seeking a refund of the attorney fees she paid to them and
other damages for their failure to represent her. The bankruptcy court, liberally
construing Steward’s pro se filing, determined that this request was one for a
disgorgement of fees which is a claim that should be made in the main bankruptcy
case pursuant to 11 U.S.C. § 329(b) and not in an adversary proceedings.
Accordingly, the amended complaint was re-docketed as a motion to disgorge fees
in the main bankruptcy case.
It is the actions of Appellants in the disgorgement of fees litigation which
gave rise to the sanctions imposed on them and the basis of this appeal.
On April 8, 2013, the bankruptcy court provided Robinson and Critique with
notice of a hearing of Steward’s motion to disgorge set on May 8, 2013. Pursuant
to Local Bankruptcy Rule (L.B.R.) 9013-13, Robinson and Critique were required
to file a response to the motion within seven days. They failed to do so. On May
7, 2013, one day before the hearing, Appellant Elbert Walton entered his
appearance on behalf of “James Robinson d/b/a Critique Services, L.L.C.” On the
same day Walton filed an untimely response to the motion to disgorge and mailed a
copy to Steward, which meant that she would not receive a copy of the response
before the hearing.
The May 8, 2013 hearing was continued to May 15, 2013 because Steward
was late for the hearing. Steward, Robinson, and Walton appeared at the May 15,
2015 hearing. The hearing was continued again because Steward had just received
Robinson and Critique’s response to her motion and it became apparent that the
parties had not attempted to communicate in advance of the hearing as is required
by L.B.R. 2093(B) and the parties had not prepared a joint stipulation of
uncontested facts. The hearing was continued to June 26, 2013.
On June 17, 2013, counsel entered an appearance for Steward. Counsel also
filed a motion to convert the June 26, 2013 hearing into a status conference. That
motion was granted and the status conference was ultimately continued to August
On June 26, 2013, Steward served interrogatories and requests for production
on Robinson d/b/a Critique. The discovery sought, among other information, to
clarify and identify the relationship between Robinson and Critique.
On July 10, 2013, Steward recanted her prior statements made in her
bankruptcy documents which were compiled and submitted by Robinson and
Critique. She filed amended documents with the bankruptcy court which included
a summary of the factual corrections.
On July 20, 2013, Appellants filed a motion to quash Steward’s discovery
requests. The motion wrongly asserted that discovery was not permitted in a
contested bankruptcy matter. The bankruptcy court denied the motion on July 31,
2013 as frivolous and vexatious.
Appellants’ responses to the discovery requests were due no later than July
26, 2013. Appellants did not file any responses, objections, or request a protective
order. On August 14, 2013, Walton appeared before the bankruptcy court for
Robinson and Critique at the discovery status conference. He stated that the
responses to the discovery were complete and would be provided the next day.
Walton indicated that everything would be produced with the exception of some
personal financial information. Another status conference was set on September 4,
Appellants did not provide discovery responses until the evening of
September 3, 2013 which did not allow Steward’s counsel to review the responses
before the hearing set on September 4, 2013. As a result, the status conference was
continued to September 11, 2013 to allow counsel to review the responses.
At the September 11, 2013, it became apparent that the discovery responses
were grossly insufficient. Walton’s representation at the August 14, 2013 hearing
that the responses were complete had been misleading. For the most part, the
responses were refusals to respond based on untimely, non-specific objections.
Those objections were asserted based on scope, vagueness, relevancy, work product
or harassment. Walton’s demeanor at the September 11th hearing was combative,
argumentative, and disrespectful to both the bankruptcy court and to Steward. He
blamed Robinson for not providing him with discovery, he accused Steward of
perjury, and he declined to produce anything further subject to his discovery
objections absent a motion to compel filed by Steward. This last position was
baseless because Appellants had already waived their right to object to the
discovery by failing to file objections in a timely fashion as required by the Federal
Rules of Civil Procedure.2
The bankruptcy court patiently handled Walton’s disrespectful manner and
continued the matter to September 18, 2013 to allow Steward to file a motion to
compel. On September 16, 2013, Steward filed her motion to compel and moved
to expedite the hearing of the motion to be held on September 18, 2013 at the status
conference. Appellants consented to the motion to expedite and filed a response to
the motion to compel on the morning of the September 18th hearing.
The September 18th hearing mirrored the bad conduct evidenced at the
Appellants needed to file their objections to Steward’s discovery requests by July 26, 2013 (thirty days after
request made). The objections were not filed until September 3, 2013, well after the deadline to file objections.
See Fed.R.Civ. P. 33 and 34. As a result, Appellants waived any objections to Stewart’s discovery requests.
September 11th hearing. Walton was disrespectful to the bankruptcy court,
attempted to disparage Steward, asserted legally frivolous positions, and revealed
that he, Robinson, and Critique improperly withheld discovery and forced Steward
to file a motion to compel to obtain the discovery which had been withheld in bad
faith. The bankruptcy court ruled that Appellants had waived any objections to
discovery. The court granted the motion to compel and ordered Appellants to
provide all the information sought in discovery within seven days. The court
allowed Appellants to file any financial information under seal.
In addition, the bankruptcy court ordered Robinson and Critique to pay
Steward’s counsel $1,710.00 in attorney’s fees related to the prosecution of the
motion to compel. The bankruptcy court also imposed a sanction of $1,000.00 a
day for each day Robinson and Critique fail to fully comply with discovery after the
seven day deadline. Finally, the bankruptcy court’s order addressed Walton. The
court noted Walton’s unprofessional and disrespectful demeanor in the courtroom
in his last several appearances and notified Walton that if he exhibited similar
behavior in the future, Walton would be personally fined $100.00 for each act of
disrespectful behavior. The bankruptcy court ended the order with the statement,
“In the future, Mr. Walton should bring to this Court either a professional,
respectable demeanor or his checkbook.” [App. Vol. II at 333]
Instead of producing discovery, Appellants assailed the bankruptcy court
with a slew of motions over the next several days. They included:
- a motion to recuse;
- a motion for judgment on the pleadings;
- a motion to set aside the order compelling discovery;
- a motion to dismiss;
- and an amended motion to dismiss.
In the motion to recuse Walton referred several times to Critique as Robinson’s
d/b/a and as the law firm through which Robinson does business. The bankruptcy
court denied all of these motions because they were without merit. A status
conference was set on October 1, 2013.
At the October 1, 2013 status conference, it was revealed that no further
discovery had been provided since the order to compel has been granted.
Moreover, Walton stated for the first time that Robinson and Critique would not
comply with the court’s orders, but instead, would seek leave to appeal and would
file a petition for a writ of mandamus. On October 2, 2013, the bankruptcy court
entered an order, in a second attempt to obtain compliance with the court’s previous
order, which sanctioned Robinson and Critique $1,000.00 per day for each day of
noncompliance going forward thereafter, and gave notice that, after thirty days, the
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bankruptcy court may impose further sanctions. The order also provided that the
sanctions would not accrue on any day that there was a pending request for leave to
file an appeal or a pending appeal.
Appellants filed a notice of appeal on October 2, 2013 and filed a motion
with the Bankruptcy Appellate Panel (B.A.P.) for leave to file three interlocutory
appeals. Appellants also filed a motion to stay in the bankruptcy court. The
motion to stay was denied on October 4, 2013. On October 8, 2013, the B.A.P.
denied the motion for leave to file interlocutory appeals. On October 9, 2013, the
$1,000.00 per day sanctions began to accrue.
On November 1, 2013, Appellants filed a motion for a writ of mandamus in
the United States District Court for the Eastern District of Missouri which was
denied on December 10, 2013.
Between October 9, 2013 and November 12, 2013, Robinson and Critique
refused to comply with the court order compelling discovery. By then, $35,000.00
of sanctions had accrued. On November 13, 2013, the bankruptcy court, realizing
that its order compelling discovery was being ignored, entered a second order
imposing sanctions which stopped the accrual of further monetary sanctions, made
a finding of contempt pursuant to Fed. R. Civ. P. 37(b)(2)(A)(vii), and entered an
order making the sanctions, which had already accrued, final and payable. This
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sanctions order was not imposed to induce the production of discovery, it was
imposed as a sanction for Robinson and Critique’s willful refusal to comply with
the bankruptcy court’s previous order compelling discovery. However, the
sanctions could still be avoided if Robinson and Critique complied with the order to
compel and produced the requested discovery.
On November 27, 2013, Appellants filed a notice of appeal seeking to appeal
the second order of sanctions in the United States District Court for the Eastern
District of Missouri. Appellants asserted that the second order of sanctions was a
final order for criminal sanctions. However, the order was an interim order and of
a civil nature because Appellants could purge themselves of contempt by producing
the ordered discovery. In order to clarify the availability of purgation for
Appellants, the bankruptcy court filed a notice to Appellants, on December 2, 2013,
regarding the sanctions imposed. The notice stated that if the Appellants decided
to properly participate in discovery the court would deem that sanctions were no
longer necessary. However, it was clear that if the discovery sanctions were
enforced, they were payable to the bankruptcy court for Appellants’ disregard of the
court’s orders. These sanctions could not be avoided by the parties reaching a
settlement in the case.
On January 23, 2014, in another attempt to allow Appellants to avoid the
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sanctions already imposed in the case, the bankruptcy court asked the Chapter 7
Trustee to communicate to the Appellants that the sanctions could be satisfied by an
alternate, nonmonetary method. The alternate proposal required Robinson and
Critique to provide, under seal, information about the ownership and structure of
Critique (to clarify once and for all how Robinson and Critique are related); file a
letter of apology for their contempt; admit they made, through their attorney, false
representations in the bankruptcy proceedings; agree to attend continuing legal
education; and agree not to be represented again by, or serve as co-counsel with,
Walton before the bankruptcy court (to ensure that the improper actions taken in the
matter would not repeated in the future). This proposal was an alternative to
Robinson and Critique’s option of paying the $35,000.00 sanction and having
Walton continue to represent them.
In January 2014, Appellants attempted to settle the disgorgement action with
Steward as well as a second adversary complaint which had been filed in the case.
On March 22, 2014, Steward filed a notice in the bankruptcy case that the
settlement efforts had collapsed. Thereafter, the bankruptcy court proceeded on
the disgorgement action and the related sanctions issues involved in the case.
On April 3, 2014, the bankruptcy court entered two notices regarding
sanctions. The first informed Robinson and Critique that the court was considering
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further and final sanctions for their failure to comply with court ordered discovery.
These additional sanctions included, striking their pleadings, rendering a default
judgment against them, and entering any other sanction and relief authorized by
The second notice was directed to Walton informing him that the court was
considering imposing sanctions against Walton. Sanctions may be imposed against
an attorney who represents a party who refuses to cooperate with discovery and
participates in his client’s contemptuous or vexations behavior. Walton was
notified that he could be sanctioned for his actions including, vexatiously increasing
the costs of litigation by interfering with discovery; making false representations to
the court; filing frivolous motions for the purpose of avoiding discovery; asserting
untimely and waived objections to discovery; and making false allegations against
the presiding bankruptcy judge. A response to both notices was due by April 11,
On April 7, 2013, the bankruptcy judge entered an order directing Steward’s
counsel to file an affidavit attesting to his attorney’s fees, costs, and expenses.3
The order stated this information was going to be considered in the imposition of
additional sanctions against Robinson, Critique, and Walton.
On April 10, 2013, Walton filed a motion to withdraw as counsel. On the
Although Steward’s counsel was representing her pro bono, the bankruptcy court determined that counsel should
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same day Robinson filed a notice of dismissal purporting to dismiss Walton as his
counsel. Both the motion and notice were denied by the bankruptcy court which
saw the motions as hollow attempts by Walton to avoid sanctions.
Also, on April 10, 2013, Steward filed a motion to compromise controversy,
a notice to the court regarding discovery, and a proposed settlement under seal.
On April 11, 2013, Robinson filed a response to the notice of sanctions
which did not substantively address the issues raised in the court’s notice. Walton
did not file a response to the notice of sanctions directed to him. Instead he filed a
second motion to recuse the bankruptcy judge from the case. The bankruptcy
judge denied this motion on April 14, 2014.
Also on April 11, 2014, the bankruptcy court ordered Steward to accept
discovery should Appellants attempt to provide the discovery in an eleventh hour
effort to avoid sanctions.
Walton also filed a motion to substitute attorney on April 11, 2014, asserting
that he had a conflict with Robinson and Critique. Because he failed to provide
any facts in support of this motion, the bankruptcy judge denied it without prejudice
to allow it to be refiled with a supporting factual basis. Walton did not renew this
motion and continued to file papers on behalf of Robinson and Critique.
compute what his usual fees would have been regarding the discovery dispute to craft a reasonable sanction.
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On April 14, 2014, Walton filed a civil suit in the Circuit Court of the City of
St. Louis against the bankruptcy judge in his personal capacity, alleging claims
related to the bankruptcy court’s offer of an alternate method to satisfy the sanctions
imposed in the disgorgement proceedings. This case was removed to the United
States District Court for the Eastern District of Missouri. The district court
dismissed the case based on judicial immunity on September 12, 2014.
On April 21, 2014, the bankruptcy judge entered another notice to Robinson,
Critique, and Walton providing notice that the court intended to impose sanctions
against them for making false statements about the judge’s service in government
employment as the United States Trustee for Region 13. The court gave them until
April 28, 2014 to file joint or separate responses.
On April 23, 2014, Appellants filed a third motion to recuse the bankruptcy
judge which the bankruptcy court denied the same day.
On April 28, 2104, both Watson and Robinson filed a response to the notice
of sanctions dated April 21, 2014. Neither response offered any cause why
sanctions should not be imposed nor did they request a hearing on whether
sanctions should be issued.
Also on April 28, 2014, the bankruptcy court denied Steward’s motion to
compromise controversy without prejudice, subject to refiling by or jointly with the
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Chapter 7 Trustee.
Finally, on June 10, 2014, the bankruptcy judge entered the judgment
imposing sanctions and on June 11, 2013, he entered the amended memorandum
opinion and order in support of the judgment which is the basis of this appeal. The
order noted that it was being entered because the imposition of escalating sanctions
had proved to be ineffective.
The bankruptcy judge found Robinson and Critique in contempt and that
their “contempt was facilitated and promoted by Mr. Walton through his strategy of
untimeliness, obfuscation, vexatious litigation, misleading representations, false
statements, abuse of process and frivolous legal positions.” The order made final
and immediately payable, the $30,000.004 sanction for Robinson and Critique’s
refusal to comply with the bankruptcy court’s order compelling discovery. In
addition, the court struck Robinson and Critique’s claims and defenses in the
The bankruptcy court’s order imposed sanctions against Walton for his
actions in the case. The court made Walton jointly and severally liable for the
$30,000.00 in sanctions imposed upon Robinson and Critique. The order stated
that Walton had endorsed, facilitated, and actively promoted Robinson and
This amount had originally been $35,000.00 but was reduced by the bankruptcy court.
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Critique’s refusal to meet their discovery obligations. The order stated that “Mr.
Walton’s actions have been just as disgraceful, abusive and worthy of sanctions as
have been those of his clients.”
The bankruptcy court’s order also ruled in favor of Steward’s disgorgement
claim, in part. The court awarded her a refund of the $495.00 in fees she paid to
Robinson and Critique. However, the court denied any relief related to damages
incurred by Steward in her dispute with Ford Motor Credit. The court’s order
stated that Steward’s claims against Robinson and Critique related to their failure to
render legal services to Steward to rescind the reaffirmation agreement was beyond
the scope of a disgorgement action. That claim needed to be brought as a
The bankruptcy court’s order also imposed a sanction against Robinson,
Critique, and Walton, jointly and severally, in the amount of $19,720.00 for
attorney’s fees Steward’s counsel incurred litigating the discovery dispute at issue
in this matter.5
In addition, the bankruptcy court sanctioned Robinson, Critique, and Walton
under Federal Rules of Bankruptcy Procedure Rule 9011 for making false
statements at hearings and in pleadings, including but not limited to, false
Only $1,710.00 of the fees were to be made directly to Steward’s counsel. The remaining $18,010.00 in fees were
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statements regarding the status of discovery responses and the intent to produce
discovery, and false statements made about the bankruptcy judge’s previous
employment as the United States Trustee in various pleadings. Instead of imposing
monetary sanctions, the bankruptcy court’s order stated that the Rule 9011
sanctions would be combined with sanctions under the court’s inherent power and
under the local rules and directives of the bankruptcy and district courts to suspend
Robinson and Walton from practicing law before the United States Bankruptcy
Court for the Eastern District of Missouri.
Robinson’s suspension was imposed for one year and his privileges will not
be reinstated after one year unless: (i) Robinson provides specific information
required by the order regarding his relationship with Critique and the nature of
Critique’s bankruptcy business; (ii) the monetary sanctions imposed in the order are
satisfied; (iii) Robinson provides evidence he is in good standing in all other courts
in which he has been admitted to practice; and (iv) the facts otherwise establish
reinstatement is proper.
Walton’s suspension was also imposed for one year and his privileges will
not be reinstated after one year unless: (i) the monetary sanctions imposed against
Walton in the order are satisfied; (ii) he provides evidence he is in good standing in
to be remitted to a local legal services charity of Steward’s counsel’s choice.
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all other courts in which he has been admitted to practice; and (iii) the facts
otherwise establish reinstatement is proper.
Finally, the bankruptcy court ordered that the actions of Robinson, Critique,
and Walton be referred to the United States District Court for the Eastern District of
Missouri for any disciplinary investigation that may be proper; to the Office of the
United States Trustee as a report of suspected bankruptcy fraud or abuse; and to the
Office of Chief Disciplinary Counsel of the Missouri Supreme Court for violations
of the rules of professional conduct.
Appellants filed the present appeal in this Court seeking to overturn the
bankruptcy court’s judgment. Appellee Steward opposes the appeal and argues
that the bankruptcy court’s judgment should be affirmed.
Jurisdiction and Legal Standard
This court has jurisdiction over this appeal pursuant to 28 U.S.C. § 158(a)(1).
Appellants filed a timely notice of appeal.
“When a bankruptcy court's judgment is appealed to the district court, the
district court acts as an appellate court and reviews the bankruptcy court's legal
determinations de novo and findings of fact for clear error.” Fix v. First State Bank
of Roscoe, 559 F.3d 803, 808 (8th Cir. 2009) (internal quotation and citation
omitted). Issues committed to the bankruptcy court's discretion are reviewed for an
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abuse of that discretion. In re Zahn, 526 F.3d 1140, 1142 (8th Cir. 2008). An
abuse of discretion occurs when the bankruptcy court fails to apply the proper legal
standard or bases its order on findings of fact that are clearly erroneous. Id.
Appellants raise a host of grounds for relief on appeal. The bankruptcy
court’s amended memorandum opinion and order thoroughly addressed many of
these grounds which Appellants raised previously in the bankruptcy court. I find
each of the grounds for relief raised by Appellants to be without merit.
Appellants claims are:
The Debtor did not have standing to bring her disgorgement claim because it
belonged to the Chapter 7 Trustee
A review of the record reveals that Steward did have standing to bring he
claim for disgorgement. A debtor’s bankruptcy estate is comprised of all her legal
and equitable interests in property as of the commencement of the bankruptcy case.
11 U.S.C. § 541(a)(1). The injuries that form Steward’s complaint occurred both
before and after her bankruptcy case commenced on June 17, 2011. The Chapter 7
Trustee abandoned any interest in Steward’s bankruptcy estate, first on July 26,
2011, before the motion to disgorge was filed. The Trustee again abandoned any
interest in the estate on July 26, 2013, after the motion to disgorge was filed. To
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the extent any part of the disgorgement claim was part of Steward’s estate before
she filed for bankruptcy, that aspect of the claim was abandoned by the Trustee .
As a result Steward had standing to pursue her claim.
Judge Rendlen should have recused himself because he had been an
adversary against Critique Services, L.L.C. before becoming a judge
Ten years before being appointed to the bankruptcy bench, the bankruptcy
judge had been the United States Trustee for Region 13. He served in that capacity
for three years. He supervised assistant United States Trustees in their duties. He
was the named plaintiff in actions brought by his office. While he was the Trustee,
his office investigated and filed two lawsuits against Critique Services L.L.C. and
certain of its employees (but not against Robinson). Both cases settled. The
bankruptcy judge did not personally conduct an investigation, draft pleadings, or
otherwise direct the prosecution of Critique in those cases.
Appellants argue that the bankruptcy judge should have recused himself
under 28 U.S.C. § 455(a).6 That statute directs that a judge “shall disqualify
himself in ay proceeding in which his impartiality might reasonably be questioned.”
Appellants assert that the judge’s former position as the United States Trustee and
Appellants also halfheartedly assert that the judge should have recused himself under 28 U.S.C. § 144. However,
that statute only applies to district court judges and Appellants have failed to file a sufficient affidavit as required by
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the lawsuits filed against Critique while he was Trustee supports a claim that the
judge’s impartiality toward Critique might reasonably be questioned by an
objective, neutral observer. However, nothing in the record supports such a
finding. There is no evidence that any facts or issues that were raised in those
proceedings were relevant or related to Steward’s motion to disgorge. Nor is there
any evidence that the bankruptcy judge was personally involved the investigation or
prosecution of those lawsuits
Appellants also allege that the bankruptcy judge engaged in personalized
attacks against Walton and Robinson. The record does not support this accusation.
To the extent that the judge expressed his exasperation or impatience with Robinson
and Walton’s actions and demeanor, such expressions do not establish judicial bias.
Liteky v. United States, 510 U.S. 540, 555-556 (1994)(a judge’s display of
impatience, dissatisfaction, annoyance, and even anger based on proceedings in a
case do amount to bias or impartiality). There is nothing in the record which
would give a reasonable person a reasonable basis for questioning the judge’s
impartiality. As a result, the bankruptcy judge properly denied Appellants’ motion
Debtor acknowledged that the attorney’s fees she paid were disgorged
resulting in the bankruptcy court losing jurisdiction over the subject matter
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Appellants claim for the first time on appeal that Steward’s disgorgement
claim became moot when a payment of $199.00 was made to her counsel by a third
party. A ground for relief raised on appeal that was not raised in the trial court
cannot be considered on appeal as a basis for reversal.
Gregory by Gregory v.
Honeywell, Inc., 835 F.2d 181, 184 (8th Cir. 1987) (“It is old and well-settled law
that issues not raised in the trial court cannot be considered by this court as a basis
for reversal.”)(internal quotes and citation omitted). Because this ground for
appeal was not raised in the bankruptcy court, it fails here.
Even if I did consider this ground for relief, it is without merit. In a
declaration dated November 12, 2013, an attorney also associated with Critique,
Ross Briggs, remitted $199.00 to Steward’s counsel. Briggs indicated that the
$199.00 was the fee that Steward paid for her bankruptcy filing. But Briggs never
represented Steward. In addition, the record established in the bankruptcy court
that Steward paid a fee of $495.00. Nothing in the record indicated the $199.00
was from Robinson or Critique. Nor did Steward accept this money as a settlement
of her claim. As a result, the payment of this fee to Steward’s counsel did not
deprive the bankruptcy court of subject matter jurisdiction over the case.
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No sanctions should have been entered against Critique Services, L.L.C.
because no discovery was directed toward it
Appellants assert for the first time on appeal that Robinson and Critique are
two separate entities.7 Appellants failed to raise this issue to the bankruptcy court
and did not offer or introduce any evidence in that court to show they are two
separate entities. As this issue was not raised in the bankruptcy court, it cannot be
raised for the first time here. See Honeywell, Inc., 835 F.2d at 184.
Moreover, the bankruptcy court made a finding that Robinson and Critique
are the same entity. Through multiple pleadings Robinson asserts that Critique
was his d/b/a and that Critique was Robinson’s law firm. Watson entered his
appearance and represented both Robinson and Critique. Discovery was directed
to both Robinson and Critique and they never asserted a claim or made a response
that they were two different entities. That was part of the trouble with discovery,
Robinson and Critique refused to provide discovery regarding their relationship.
As a result, I find that discovery was directed to Critique Services, L.L.C. in
the bankruptcy court.
Appellants have submitted Articles of Incorporation for Critique Services L.L.C. for consideration in this appeal.
However, this document was not provided in the proceedings before the bankruptcy court and will not be considered
for the first time in this Court on appeal.
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The bankruptcy court should have dismissed Critique Services, L.L.C. before
any order was entered against it because of Plaintiff’s failure to serve it
This claim is also raised for the first time on appeal and will be denied for
that reason. Honeywell, Inc., 835 F.2d at 184. Moreover, Robinson held himself
out to the bankruptcy court as Critique. Walton and Robinson made numerous
representation in the bankruptcy court that Robinson was doing business and
Critique and that Critique was his law firm and Critique’s staff was his staff. It a
minimum, Appellants waived the bankruptcy court’s personal jurisdiction over
Critique through their false representations and their conduct in litigation. Yeldell
v. Tutt, 913 F.2d 533, 539 (8th Cir. 1990)( defendant can waived a defense of lack
of personal jurisdiction through conduct before the court).
The bankruptcy court should have dismissed the motion to disgorge because
of the Debtor’s bad conduct of admittedly lying under oath
Appellants assert that Stewart’s motion to disgorge should have been
dismissed by the bankruptcy court under the doctrine of unclean hands. Appellants
assert that Stewart admitted she submitted her initial bankruptcy papers with false
information about her address and about dependents. Based on these false
representations, Appellants argue her disgorgement case should have been
~ 26 ~
The doctrine of unclean hands is not based on absolutes. It requires
consideration of all the facts and circumstances of a particular case so that its
application promotes justice. Nelson v. Emmert, 105 S.W.3d 563, 568 (Mo. Ct.
App. 2003). The doctrine cannot be asserted by a party who also has unclean
hands. Rose v. Houser, 206 S.W.2d 571, 577 (Mo. Ct. App. 1947)(the pot cannot
call the kettle black). Based on the bankruptcy court’s ruling, all the facts alleged
by Steward in her disgorgement proceeding are deemed to be true. Steward
asserted that it was Robinson and Critique who induced her to make false
representations regarding her address and dependent status. Appellants cannot be
rewarded for their own actions in inducing such false information through the
doctrine of unclean hands. Moreover, Steward corrected any incorrect information
in her initial bankruptcy papers. As a result, the bankruptcy judge did not err in
refusing to dismiss Steward’s disgorgement claims based on the doctrine of unclean
The bankruptcy court had no authority to sanction Appellants for discovery
failures once the parties settled their differences
This ground for relief was also not raised in the bankruptcy court and fails
for that reason. Honeywell, Inc., 835 F.2d at 184.
It also fails because there was
no settlement of the disgorgement claim. The claim was not settled because the
~ 27 ~
proposed settlement agreement was specifically conditioned upon the bankruptcy
court’s approval of the settlement. The bankruptcy court rejected the settlement
without prejudice subject to the review and approval of the settlement by the
Chapter 7 Trustee.
The bankruptcy court was without authority to change Debtor’s amended
complaint in the adversary proceeding into a motion to disgorge attorney’s fees in
Debtor’s Chapter 7 case
The bankruptcy court properly viewed the pro se amended complaint
Steward filed in her adversary proceeding as more appropriately deemed to be a
disgorgement proceeding. The court had subject matter jurisdiction over that
proceeding. Walton v. LaBarge (In re Clark), 223 F.3d 859, 863 (8th Cir. 2000)
(“The bankruptcy court has the broad power and discretion to award or deny
attorney fees, and, indeed, a duty to examine them for reasonableness.”). The court
also had the power to cause improperly docketed pleadings re-docketed correctly.
Winston v. Friedline, 2009 WL 3747225, 2 (W.D. Pa. November 5, 2009)
(re-docketing a pro se complaint as a motion for sanctions “in fairness” to the
nature of the document). As a result, the bankruptcy court did not err by
re-docketing Steward’s amended adversary proceeding complaint as a motion to
disgorge in contested proceeding in the main bankruptcy case.
~ 28 ~
The sanctions and penalties entered by the bankruptcy court were for
criminal contempt for which it had no authority and were not pursuant to a motion,
notice and hearing as required by bankruptcy rules
The bankruptcy court did not err by imposing monetary sanctions against
Appellants. The bankruptcy court clearly states and explains in its order that the
monetary sanctions it imposed were civil in nature.
The attorney’s fees sanction of $19,720.00 was imposed against Appellants
pursuant to Fed. R. Civ. P. 37(b)(2)(C)8 and 11 U.S.C § 105(a).9 Although
Steward’s counsel was providing pro bono representation, the bankruptcy court had
counsel submit an affidavit of counsel’s usual fees counsel would have charged
based on Appellants’ failure to comply with discovery. The bankruptcy court had
the power to order the disobedient party, Appellants, to pay the reasonable
attorney’s fees incurred by Appellants’ failure to comply with the courts discovery
orders. To not allow such a sanction because Steward’s counsel was providing pro
bono representation would amount to a windfall for Appellants. It is permissive,
fair, and just for Appellants to bear the expense of the burden of time, effort, and
expense Steward’s counsel spent in response to Appellants’ bad acts.
Rule 37(b)(2)(C) provides for sanctions in the form of attorney’s fees and expenses.
Section 105(a) states, “The court may issue any order, process, or judgment that is necessary or appropriate to
carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in
interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination
~ 29 ~
Similarly, the $30,000.00 in sanctions the court imposed for Appellants
obstinate refusal to comply with the court’s discovery orders were authorized by
Rule 37(b)(2)(A) and 11 U.S.C. § 105(a). Moreover, Appellants were given
numerous opportunities to purge themselves of the bankruptcy court’s sanctions.
In addition, Appellants were provided with multiple notices that the imposition of
sanctions was being considered by the bankruptcy court and they were given ample
opportunities to file responses and request hearings before the sanctions were
As a result, the bankruptcy judge did not err by imposing monetary sanctions
Under local rule of court, a single judge does not have the authority to
suspend an attorney from practice before it
Appellants contend that the bankruptcy court does not have the authority to
unilaterally suspend an attorney from practice before the bankruptcy court. The
Appellants argument turns on their interpretation of the Local Rules of the United
States Court for the Eastern District of Missouri (E.D.Mo. L.R.) and the District
Court’s Rules of Disciplinary Enforcement.
Local Bankruptcy Rule 2094-C provides that “[n]othing in this Rule shall
necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.”
~ 30 ~
preclude the Court from initiating its own attorney disciplinary proceedings
regardless of whether an attorney has been disciplined by another court,” and
L.B.R. 2090-A provides that the bankruptcy court adopts “[t]he requirements for …
attorney discipline … outlined in the Rules 12.01-12.05” of the E.D.Mo. L.R.
E.D.Mo. L.R. 12.02 provides that:
[a] member of the bar of this Court and any attorney appearing
in any action in this Court, for good cause shown and after having
been given an opportunity to be heard, may be disbarred or otherwise
disciplined, as provided in this Court’s Rules of Disciplinary
Enforcement. In addition, a judge may impose sanctions pursuant to
the Court’s inherent authority, Fed.R.Civ.P. 11, 16 or 37, or any other
applicable authority, and may initiate civil or criminal contempt
proceedings against an attorney appearing in an action in this Court.
The Eastern District’s Court’s Rules of Disciplinary Enforcement (E.D.Mo.
R.D.E.) contain two relevant provisions. The first is Rule IV-A which provides:
[f]or misconduct defined in these Rules, and for good cause
shown, and after notice and opportunity to be heard, any attorney
admitted to practice before this court may be disbarred, suspended
from practice before this court, reprimanded or subjected to such other
disciplinary action as the circumstances may warrant.
This rule allows a judge to disbar an attorney from practicing before the bar (in this
case the bankruptcy court) for misconduct, for good cause, after notice and an
opportunity to be heard.
~ 31 ~
In imposing the suspension of Robinson and Walton in this case, the
bankruptcy court relied on its inherent authority under Supreme Court precedent,
E.D.Mo. L.R. 12.02, and E.D.Mo. R.D.E. Rule IV-A. The bankruptcy court’s
order and the court’s record thoroughly detail Robinson’s and Walton’s misconduct
and violations of the rules of professional ethics. The bankruptcy judge provided
good cause for the suspension sanction and provided ample notice and opportunities
to be heard to Robinson and Walton.
Appellants argue that their license to practice can only be suspended by
following the procedures stated in second relevant provision of the E.D.Mo. R.D.E.,
Rule V. That Rule provides,
[w]hen misconduct or allegations of misconduct which, if
substantiated, would warrant discipline of an attorney admitted to
practice before this court shall come to the attention of a Judge of this
court, whether by complaint or otherwise, and the applicable procedure
is not otherwise mandated by these Rules, the judge may refer the
matter to counsel appointed under Rule X for investigation and
prosecution of a formal disciplinary proceeding or the formulation of
such other recommendation as may be appropriate.
Under Rule V appointed counsel may initiate a formal disciplinary
proceeding and a hearing is conducted before a panel of three judges.
The bankruptcy court had the authority and, in this case, a justifiable basis, to
suspend Robinson’s and Walton’s privilege to practice before the bankruptcy court
~ 32 ~
for one year. The bankruptcy court did not need to refer the matter to appointed
counsel for “investigation and prosecution of a formal disciplinary proceeding”
because the misconduct at issue was directed at and witnessed by the bankruptcy
court. The authority to impose a suspension derives from the bankruptcy court’s
inherent power. Law v. Siegel, 134 S. Ct. 1188, 1194 (2014) (the bankruptcy court
possesses inherent power to sanction abusive litigation practices); Chambers v.
NASCO, Inc., 501 U.S. 32, 43-44 (1991) (“a federal court has the power to control
admission to its bar and to discipline attorneys who appear before it.”) “Because
of their very potency, inherent powers must be exercised with restraint and
discretion.” Id. at 44. But that restraint and discretion does not bar severe
sanctions where they are warranted. The bankruptcy court had the authority to
impose its suspension without initiating a “formal disciplinary proceeding” under
E.D.Mo. R.D.E. Rule V.
As a result, the bankruptcy court’s decision to impose a one year suspension
of Robinson’s ad Walton’s privilege to practice before the bankruptcy court is
It is clear from the record that Robinson, Critique, and Walton’s obstinate
behavior before the bankruptcy court was based, at least in part, on their effort to
~ 33 ~
shield any discovery of how Critique Services L.L.C. is organized and how it does
business. Critique, if it is a separate entity from Robinson, may impermissibly be
practicing law and /or impermissibly sharing attorney fees with Robinson and other
attorneys. It also appears, based on Steward’s experience, that Robinson and
Critique are violating legal ethical rules in their representation of clients in
bankruptcy matters. However, the resolution of these issues is not the subject of
It is also clear from the record that Robinson and Walton acted in an
unprofessional, dismissive, and sanctionable demeanor toward the bankruptcy court
throughout the litigation of this matter in that court.
Based upon the foregoing, the bankruptcy court’s Judgment and Amended
Memorandum Opinion and Order imposing sanctions on Appellants is affirmed.
RODNEY W. SIPPEL
UNITED STATES DISTRICT JUDGE
Dated this 31st day of March, 2015.
~ 34 ~
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