Rozelle, Jr. et al v. Branscomb, P.C., et al

Filing 21

MEMORANDUM OPINION This Court finds that the Bankrupicy Court did not errin granting any of these five orders. Accordingly, this Court will affirm all five of the Bankruptcy Court's orders on appeal. Signed by Judge Royce C. Lamberth. (rg)

FILED
AUG01

UN.ITEI.) STATES DISTRICT COURT

FOR TIlE WESTERN DISTRICT OF TEAS

CLERK,

U.S.

2017

DISTRJCT CLERK

VSTERN D1I1 OF TEXAS
BY

DEPUTY

ROZELLE, JR ET AL.,
Appellants,

Civil Case No. 5:16-cv-01024 (RCL)

V.

BRANSCOMB, P.C., ET AL.,
Appdllees.

MEMORANDUM OPINION
I.

INTRODUCTION
This case comes before the Court on appeal from live separate orders of the Bankruptcy

Court regarding the jointly administered bankruptcy cases of Francis MeQucen Rozelle, Jr.

(appeliantldcbtor) and Clarita Sonmiers Johnson (appellant/debtor). The debtors, Francis
MeQuecu Rozel Ic. Jr. and Clarita Somniers. appeal the following Orders oft he Bankruptcy Court:
(1) Order Allowing First interim Application of Branscomb PC (appcllce/Uranscomb), for

Professional Fees and Expenses for Patrick Autry during the Period September
October 31, 2015 (EU? No, 593):

(2) Order Granti

& Griesenbeck, Inc., as litigation Cowscl i>c the

Texas Realty & l)cve.lopmcnt.

1,

2014 through

Amended Application to Employ Plunktt

lstate (E( 'F No. 595); (3) Order Granting Central

(appellee/broker) Application

ir Compensation

und

Reimbursement of Expenses (ECF No, 597): (4) Order (.iranhing Motion For Sanctions tor

Dchtors Attorney Misconduct under Rule 9011 LCF
For Sanctions

1ir

N. bOO): and (5) Order (.Iranting Motion

l)ebtors Auorney Misconduct under Rule 9011 filed by Patrick

H. Autrv

for

Trustee John Patrick lowe (IiCF No. 601). This Court finds that the l3ankrupicy Court did not err

in granting any of these five orders. Accordingly, this Court will affirm all five

of the Bankruptcy

Court's orders on appeal.

II.

BACKGROUND
On or about June 22, 2005, debtors inherited approximately 114 acres of land in San

Antonio, Texas (real property). On June 2, 2006, the debtors borrowed $8.225 million from

Broadway Bank to buy out Mr. Rozelle's sister,a third heir to the real property, and to pay property
taxes. Debtors extended the loan on three occasions, making the date

of maturity August

1,

2011.

However, the loan was not repaid by the date of maturity and Broadway Bank posted the property

for a non-judicial foreclosure sale on September 6, 2011. Because of the posting of the foreclosure
sale, debtors filed for Chapter

11

bankruptcy in August 2011. In this initial Chapter

11

case, the

debtors confirmed a plan of reorganization that affbrded them 18 months to satisfy the debt before
Broadway Bank could foreclose on the real property. After the reorganization plan was confirmed,
SLF Noteholder acquired the debt from Broadway Bank. Appellants failed to sell the Real Property

or pay the debt and SLF Notehoider scheduled a foreclosure sale for June 3, 2014.
On June 2, 2014, Debtors filed voluntary Chapter

11

bankruptcy petitions for a second time

and avoided foreclosure. The cases were jointly administered at Case No, 14-5i480-RBK. On

August 28, 2014, the Bankruptcy Court ordered the appointment

of

a Trustee in the jointly

administered Chapter Ii cases. John Patrick Lowe (appellee/trustee) was appointed as Trustee by
the United States Trustee and the i3ankruptcy Court approved the appointment an September 9,

2014. The trustee subsequently filed an Application to Engage Central Texas Realty &

Development LLC (appeIJeefbroker as the real estate broker to assist in the sale of the real
property. The Bankruptcy Court granted the application on October 30, 2014. \Valter G. Busby

(appellee) was designated as the principal of Central Texas Realty & Development. The debtors

appealed the order appointing Central Texas Realty but the District Court affirmed the Bankruptcy

Judge's decision. Broker was then retained by the trustee to market and sell the 14 acres pursuant
1.

to an Exclusive Listing Agreement, which stipulated that broker would receive a commission equal

to four percent (4%) of the gross purchase price of the real property and would be reimbursed for

out of pocket marketing costs up to the amount of$ 1 0000.00. With the approval of the Bankruptcy
Court, trustee also retained Patrick Autry and his law finnBranscomb PCto act as his counsel
in the administration of the bankruptcy cases.

On March 27, 2015, the Bankruptcy Court entered an order Authorizing and Approving

the Sale of Real Property Free and Clear of all Interests Pursuant to

11

U.S.C.

§

363(b) and

(f.

Appellants filed a Motion to Set Aside the Sale Order on March 24, 2016, which was amended
four days later, The Bankruptcy Court denied Appellants' motion but it prohibited the buyer from

obtaining title insurance, effectively stopping the closure of the sale. Consequently. the principal
secured creditor, SLF 1V-UTSA Blvd. Noteholder, LP (SLF Noteholder) renewed its previous

request to modify the automatic stay to allow it to foreclose on the property. The Bankruptcy Court
granted SLF Noteholder's request. To avoid ibreclosure, debtors dismissed their appeal of the Sale

Order and the sale of the real property went through. In March 2016, after the sale was completed,
debtors alleged that the sale was procured through fnwd and should be set aside pursuant to Federal
Rule of Civil Procedure 60. The Bankruptcy Court dismissed the Rule 60 motion with prejudice.
On December i 4, 2015 the debtors' cases were converted to Chapter 7 proceedings, and appellee

John Patrick Lowe was again appointed as the Trustee in the converted cases.

Chapter
Bankruptcy allows a dchtnr to retain their assets while they attempt to reorganize their debts and repay
creditors, whereas under Chapter 7 Bankruptcy a debtors assets are immediately liquidated arid creditors are paid from
the proceeds. Conversion occurred in this case to liquidate the assets of the bankruptcy estate and pay creditors afler
1

the sale

of the land.

IlL

JURiSDICTION AND STANI)ARI) OF REVIEW
A.

Jurisdiction

This Court has jurisdiction to hear this appeal pursuant to 28 U.S.C. § 158(a) which
provides district court's with the authority to h'ar appeals from tinal judgments and orders of
bankruptcy judges. When

a

district court reviews the decision of a hank rupicy court ii "functions

as an appellate court, applying the Standards of review generally applied in federal appeals courts."
Harvey Gulfhu'! Marine,

B.

Inc.

v,

Bennu

Oil

&

Gas, LLC, 559 B. R. 152, 154

(S.D. Tex. 2016).

Standard f Review

On appeal. a district court "reviews the bankruptcy court's findings of fact under the clearly

erroneous standard and its conclusions

of law de novo.' in re

1 lorrivori,

555 F.3d 473,

48() (5th

Cir. 2009). Mixed questions oflaw and tact arc reviewed tIC JwvO. See In e Po.cihve HeaIiIi j1mL,
769 F.3d 899 903 5th Cir. 2014), Maiters within a bankruptcy judge's discretion are reviewed

for an abuse of discretion." Mud King Prod.,
(S.D. Tex. 2015). 'ilie standard

Inc. v.

Aai 'I Ui/we/I

1'arco,

L P.,

2015 WI. 862319

of review appropriate for each issue raised on appealfee and

compensation awards, granting employment of iitigathm counsel, and imposing
abuse of discretion. "[lYfeferenec

(o.

v.

is the hallmark of abuseof-discretion review." Gen. Eiec.

Joiner, 522 U.S. 136, 143 (1997). A Bankruptcy Court abuses its discretion if "its ruling is

based on an erroneous review

chuves V. M/L
IV.

. . .

sanctionsis

of ihe law or on a ckarft erroneous assessment of the evidence."

Alcdina S/ar, 47 F.3d 153, 156 (5th

Cir. 1995) (citations omitted).

ANALYSIS OF DEBTORS' CENTRAL ARGUMFNTS ON APPEAL
The dehiors

appellants here- arguc that the lnnkruptcv ('ourt erred in granting all five

of appcllees' motions on the grounds that "the ftcs were procured by fraud, and the sanctions were
nothin more than efforts to cover up the fraud and punish the debtors ibr upholding their duly to
4

report fraud to the proper authorities." Appellants .Mot. to Amend Appellants Br. to Bankr. Orders.
29, ECF No, 17.
Fraud upon the court "requires a showing

of an unconscionable plan or scheme which is

designed to improperly influence the court in its decision." Wi/son

v. ./ohn.-A1uni'i/Ie Sales Coi'p.,

873 F.2d 868, 872 (5th ('jr. 1982). Under Federal Rule olCivil Procedure 9(h). "[i]n alleging fraud

or mistake, a party must state with particularity the circumstances constituting ftaud or mistake."
Fed. R. Civ. P. 9(b). In order to prove fraud, appellants' hear the burden of establishing that: (1)

appellee made a material representation that was false: (2) the appellec knew the representation
was false or made it recklessly as a positive assertion without any knowkdge of its truth; (3) the
appellee intended to induce the appellant to act upon the representation, and (4) the appellant

actually and justifiably relied on the appellee's representation. (5) which caused the appellant's
injury. See Ernst &

Young, LL.I

v.

Pacific

MutuaiLifk Ins. Co., Si S.W.3d 573, 577 (Tex. 2001).

Here, debtors' brief is composed of numerous conelusory and unsupported allegations that
detail how appellees schemed to sell the real properly for millions less than its actual worth and

subsequently committed ii'aud upon the court by providing "their own perjured testimony."
Appellants Mot, to Amend Appellants Br. to Raukr. Orders. 12. More specifically, debtors allege
thai "[buyrrsj attained the property appraised

at.

$50 million toe some $30 million below fair

market value due to the perjured testimony ol' Walt Busby, trustee John lairick Lowe and his
counsel Patrick Autry regarding entitlements and value." Id. at 16, Judge King thund that the sak

price was adequate given that the valuations debtors rrovided were for the real property "as
developed" rather than "as is." However, debtors also assert that "the impartial function of the

court was directly corrupted by an officer or ufli'c

of the

couut. and Judge King. did not perform

his judicial function, when he twice approved the sale of' the debtors property based on the now

5

public false and perjured testimony proffered by Sanders, Schumacher and those who aid, abet and
ignore." Appellants Mot. to Amend Appellants Br. to Bankr. Orders. 21. While debtors brief
contains an explanation of how the aUeged scheme

to provide sufficient

evidenceif anyto

was

carried Out, this

Court finds that they fail

support their allegations of

fraud.

Consequently.

debtors' subsequent argument that the sanctions were granted in an effort to cover up the alleged
fraud also fails.

V.

THE BANKRUPTCY COURT DID NOT ERR IN GRANTING THE FIRST
INTERIM APPLICATION OF BRANSCOMB'S APPROVAL OF ATrORNEY'S
FEES AND EXPENSES AS COUNSEL TO TRUSTEE
A.

Bankruptcy Court's Decision

The Bankruptcy Court granted the First Interim Application of Branscomb PC for
Approval of Attorneys' Fees and Expenses as Counsel to Trustee for the period beginning
September 1, 2014 through October 31, 2015 in the amount of $203,659.0() for fees and $1,718.62
for expenses. The Bankruptcy Court found the fees and expenses to be reasonable and
necessary

given that appellee Branseomb and their attorneyPatrick

Autryacted

businessmen" throughout the sale of the Real Property. Trans. of Aug.

1,

2016, ¶

as "shrewd

Ii. ECF No. ii -

2.
B.

Legal Standards
i.

compensation of Officers

under Section 330 of the Bankruptcy Code, Bankruptcy Courts have the discretion to
award reasonable compensation "for actual, necessary services rendered" to debtors' trustee,
attorney, or other paraprofessionals employed by any such person in bankruptcy cases.
§

11

U.S.C.

330(a)(1)(A). The Bankruptcy Court also has the discretion to reimburse these parties for "actual

necessary expenses." Id. § 330(a)( I )(A). Section 330(a)(3) further asserts that "[iJn determining

6

the amount of reasonable compensation to be awarded to an exaniiner, trustee under chapter II
j,

or professional person, the court shall consider the nature. the extent, and the value of such
services. iakrng into accun1 all relevant fic.tors.

(A) the tesperri on such, services;

melt Iin

(B) the rates charged for such services; (C) whether the services were necessary
'to the

administration of or beneficial at the time at which the service was rendered toward the completion
of, a case under this title

ft (D) whether the services were peribrrned wiUtin a reasonable amount

of time commensurate with the complexity, importance, and nature of the problem, issue, or task
addressed; (E) with respect to a professional person, whether the person is board certified or
otherwise has demonstrated skill and experience in the bankruptcy field; and (F) whether
the
compensation is reasonable based on the customary compensation charged by comparably skilled

practitioners in cases other than cases under this title 1J.'ld.
2.

§

330(a)(3).

Lodestar Method

The Fifth Circuit recognizes the lodestar method as a proper tool to calculate "reasonable"
attorneys' fees

under § 330. See Cahill v. Walker

&

Pauersoir,

l'C, 428 F.3d 536. 539, (5th Cir,

2005). "A court computes the lodestar by multiplying the number of hours an attorney
would
reasonably spend for the same type of work by the prevai[in hourly rate in the community,
A
court then may adjust the lodestar up or down based on the factors contained in 330
and its
§
consideration ol the twelve factors listed in

.Johnson,

488 F.2d at 71749,2 White the bankruptcy

Under,k4w.son. eturt's should consider the fcillowinr when calculating reasonable attorneys' les: "tfi time
and
labor required: the novelty and diliicultv of the questions: the skill requisite to pertirm the
legal service properly;
the preclusion olother employment by the attorney due to acceptance of the ea<c; the customary
fte: whether the fee
is fixed or conhineent: time hnniation imposed
the client or the t'irculnstances; the amount involved and the
results obtained: the experience, reputation, arid ability oithe attorneys; the "undesirability" of
the ease; the nature
and length of the prolissional relationship s ith the client: and awards in similar eases. Failure
to consider these
factors and to reflect ueh consideration in the record constitutes an abuse
ofdiscretiots," Johnson v, Georgia
Ilighuay Expi'r,
488 F.2d 714, 715, (5th Cir. 1974).
2

b

court has considerable discretion in applying these factors, it must explain the weight given to each
factor that it considers and how each factor affects its award," Id. at 540 (citations omitted).
C.

Analysis

On appeal, this Court reviews the Bankruptcy Court's award of fees for abuse of discretion.
See Matter of Woerner, 783

F.3d 266, 270-71 (5th Cir. 2015). Here, appellees' First interim Fee

Application presented the requisite lodestar and Johnson factor analyses to support their fee

determinations and the Bankruptcy Court conel uded that they were reasonable and necessary based
upon an hourly rate multiplied by the time expended. While debtors allege that appellee
Branseomb should

not have received any fee award given that the sale of the real property was

procured by fraud, this Court finds no evidence of this alleged fraud Additionally, appellants fail
to provide the Court with any non-conciusory evidence that the Bankruptcy Court relied on

erroneous findings of fact or law in awarding attorneys' fees and expenses to appellee Branscomb.

Because the Bankruptcy Court relied on the lodestar method to detennine Branscomb's fee
award and there is no evidence that it relied on erroneous findings of fact or law in reviewing this
method, this Court finds that the Bankruptcy Court did

not abuse

its

discretion in awarding

attorneys' fees and expenses to appellee Branscoinb.
VI.

THE BANKRUPTCY COURT DID NOT ERR iN AUTHORIZiNG CENTRAL
TEXAS REALTY & DEVELOPMENT, L.L.C.'S APPLICATION FOR
COMPENSATION AND REIMBURSEMENT OF EXPENSES
A.

Bankruptcy Court's Decishm

The Bankruptcy Court held that the terms of the Exclusive Listing Agreement for the
marketing and sale of the real property and the commission requested were reasonable and that, as
a result, Central Texas Realty was entitled to receive a commission in the amount
on the sale

of $812,000.00

of the real property identified in the Application, and a further award of $8,569.90 for

8

reimbursement of expenses incurred in Connection with the marketing and sales of the real
property,

kr

a total amount

of $820,569.90. The Bankruptcy Court considered the Fxclusiv

Listing Agreement to be reasonable given that Central Texas Realty secured a buyer for the Real
Property that. paid $20,300,000.00. This sale provided a majority olthe Funds available in debtors'

bankruptcy estates for the distribution to creditors. Judge King stated "Lilt's just a four percent
commission plus expenses, so,

I

mean. theres really no way to claim that it's unreasonable. He

did the work, he did the job, he got the sale." Trans. of Aug. 1, 2016, ¶f

C.

741.

Analysis

This Court reviews the Bankruptcy Court's award of fees for abuse of discretion, See

Mailer of Wuerner. 783 F.3d 266. 2707l (5th Cir. 2015). Section 330(a')(3) establishes that a
court should determine "the nature, the extent. and the value of such services" when determining
the proper Ice award. Ilere, the Bankruptcy Court's decision to award compensation and
expenses to ('entral Texas Realty & 1)evelopment, LLC relied on the lict that ii secured a buyer

for the real property in the amount of S20,300001),00, This Court finds that procuring a buyer for
the real property is a relevant

fctor to consider under section 33O(aX3). Additionally, debtors

fail to provide any evideno that the compensation and reimbursement

of expenses to Central

Texas Realty was based on an erroneous finding of &lct or law. ['his Court finds that the
Bankruptcy Court did not abuse its discretion in granting Central i'exas Realty's application for
compensation and reimbursement of expenses given that the Bankruptcy Court's decision relied
on the consideration

of relevant Ibetors outlined in section :;3o(tjt3),

9

VIL

THE BANKRUPTCY COURT DID NOT ERR IN AUTHORIZING 11W
TRUSTEE'S E1PLOYMENT OF FLIJNKETT & GRIESENIWCK, INC. AS
LITiGATION COUNSEL
A.

Bankruptcy Court's Decision

The Bankruptcy Court granted trustee's request to employ Ronald Horoberger of the law

office of Pkmkett & Grisenheck, Inc. as litigation counsel for the estate given that trustee's

application complied with the requirements of

ii

U.S.C. §

327 and 794, Federal Rule of

Bankruptcy Procedure 2014 and Local Rule 2014.
B

Legal Standards
1.

Standing to Appeal

"Bankruptcy standing is narrower than standing under U.S. Const. art. IlL Only a person
aggrieved has standing to appeal an order of the bankruptcy court. Prerequisites for being a person

aggrieved arc attendance and Objection at a bankruptcy court proceeding." In re Camp
Arrowhead,

lid.. 451 B.R. 678, 681 n.8 (Bankr. W.D. Tex. 2011).
2.

Trustee's Appointment of Professionals

"An order approving the employment of attorneys, accountants, appraisers, auctioneers,
agents, or other professionals pursuant to §327, §1103, or §1114 of the Code shall be made only

on application of the trustee or committee." F.

R. BANKR. P.

RuLE 2014. Under Federal Rule of

Bankruptcy Procedure 2014, (1) the application shall state the specific facts showing the necessity
for the employment; (2) the name of the person to be employed; (3) the reasons for the selection;
(4) the professional services to be rendered; (5) any proposed arrangement for compensation; and;
(6) to the best of the applicanfs knowledge, all of the person's connections with the debtor,

creditors, any other party in interest, their respective attorneys and accountants, the United States
trustee, or any person employed in the office of the United States trustee, Id. The application shall

10

be accompanied by a verified statement of the person to be employed setting forth the person's
connections with the debtor, creditors, any other party in interest, their respective attorneys and
accountants, the

States

t.3nited

trustee, or any person employed in the office of the United States

trustec Id.

C.

Analysis

This Court reviews the Bankruptcy Court's order granting appellee trustee's employment

of Plunkelt & (irisenbeck, Inc. as litigation counsel lbr the estate ihr abuse of discretion. First,
appellees assert that the order authorizing the trustee's employment of Plunkeit & Griesenbeek,
Inc. should he affirmed because debtors lack standing to appeaL On July 8. 2016, the trustee flied

his Amended Application to Employ Plunkeit & (Iriesenbeek, Inc. as Litigation Counsel. Debtors
did not object and the l3ankruptcv Court granted the motion. Because debtors !iiiled to object at

the time the motion was granted, this Court finds that they lack standmg to appeal.

However, even

if debtors did not

lack standing to appeal this Court finds that the

Bankruptcy Court did not err in granting appellee trustee's employment of Plunkett & Grisenbeck,
Inc. as litigation counsel. Here, the trustee (1) explained that Plunkdll & Griesenheck was being

employed to defend him in a Civil Action filed by the debtors because Branscomb, litigation

counsel for the estate generally, is also a defendant in the Civil Action; (2) named Ronald
Hornherger as the person to be employed: (3) explained that he selected Mr. Hamberger because

"he has years of experience in prosecuting and dcibnding claims in both Ibderal court and
bankruptcy eourt:

4) noted that Mr. Hornherger would e hired in his capacity as a lawyer: (5)

stipulated that Mr. Hornherger would be compensated on an. hourly basis at his Current rate ol
$400M0 per hour, which was subject to change: and (6) stated lie "believes that, with one

exception. Mr. lioruberger has no connections with any party in interest in this case and that he is

disinterested." App. to Emp. Litig. Counsel, ¶J

l6.

The application was accompanied by an

Affidavit from Mr. Hornbcrger, which disclosed that his partner,

ly

Griescnhcck, would be

defending the May 31, 2016 Civil Action on behalf of Patrick Autry and Branscomb PC. Again,

appellant's sole argument that the Bankruplcy Court erred in granting this order centers around
their conclusory and unsupported allegations that the sale of the real property was
procured by
fraud. Therefore, this Court finds that the Bankruptcy Court did not err in
approving the

employment of Plunkett & Griesenbeck, inc. as litigation counsel for the estate given that there is

no evidence that the Bankruptcy Court abused its discretion in approving trustee's
application to
employ litigation counsel.

VH.

THE BANKRUPTCY COURT DiD NOT ERR WHEN IT APPROVED TRUSTEE'S
AND BRANSCOMB'S SANCTIONS AGAINST THE APPELLANTS
A.

Bankruptcy Court's Decisions

The Bankruptcy Court granted Branscomb's Sanctions Motion pursuant to Federal
Rule of
Bankruptcy Procedure 9011, which permitted Branscomb to seek recovery of its fees and
expenses
in connection with its defenses

of its First Interim Fee Application. The debtors objected to the

First Interim Fee Application because they assert that Branscomb, litigation counsel to
the estate,
was not "disinterested" given that it also represented Valero Energy Corporation,
another party

who had previously tried to purchase the real property, as a client. Appellee Branscomb
asserted
that debtors' allegations were without merit given that Valero made no appearance in these
cases.
The Bankruptcy Court granted Branscomb's Sanctions Motion given that the
debtors' allegations

were conclusory and without merit, either in fact or law, even after debtors were
given the
opportunity to withdraw or correct the allegations.

Additionally, the Bankruptcy Court granted trustee's Motion for Sanctions pursuant to

Federal RUle of Bankruptcy Procedure 9011 given that appellants continued to file
frivolous
12

appeals and motions in an attempt to delay the sale of the real property. More specifically, the
Bankruptcy Court approved sanctions in the form of a "gatekeeper" order which requires the
debtors to submit all future pleadings challenging the Bankruptcy Court's prior orders of March
27, 2015 and April 22, 2015 concerning the sale of the debtors' interests in the real property, or

challenging the sale of the real property itself prior to filing any such pleading with the Court. The
Bankruptcy Court further ordered that it would review any such pleadings to determine "whether
the debtors' have, with the specificity required, alleged iion-frivolous grounds for the review of

the Sale Orders or the sale which the Court has not previously addressed?' Order Granting Mot.
for Sanctions for Debtor's Att'y. 2. ECF. No. 601.
B.

Legal Standards
1.

Federal Rule oJBankruptcy 9011

Under Federal Rule of Bankruptcy 9011, counsel certifies that to the best of their

knowledge,, information, and belief, formed after an inquiry reasonable under the circumstances,
(1) the pleadings and allegatiOns are not being presented for any improper purpose, (2) the
claims,

defenses, and other legal contentions are warranted by existing law, orby a non-frivolous
argument
for the extension, modification, or reversal of existing law or the establishment of new law;
and
(3) the allegations and other factual contentions have evidentiary support or, if
specifically

SO

identified. are likely to have evidenliary support after a reasonable opportunity for further
investigation or discovery. Fto.
2.

R.

BANKR.

P.

9011

Fee Defense Litigation Sanctions

Traditionally, under the. American rule, "each litigant pays his own attorney's fees, win or
lose, unless a statute or contract provides otherwise." Baker Baits

1L,L.J. v.

ASARCO

LLC, 135

S.

Ct. 2158, 2160 (2015). However, the Supreme Court noted in Asarco that "[1 Jo the
extent the

13

United States harbors any concern about the possibility of frivolous o1jections to fee applications.

we note that 'Federal Rule of Bankruptcy Procedure 901 ibankruptcy's analogue to Civil Rule

11authorizes the court to impose sanctions for bad-faith litigation conduct, which may include
'an order directing payment. . . of some or all of the reasonable attorneys' fees and other expenses
incurred as a direct result of the violation."' Id at 2168 n.4.
"Gatekeeper" Sanctions

3.

"Federal courts have the power to enjoin plaintiffs from future filings when those plaintiffs
consistently abuse the court system and harass their opponents." Baum
.L.LC, 51.3

i

Blue

Moon

Venttires,

F.3d 181, 183 (5th Cir, 2008) "In determining whether it should impose a pre-fihing

injunction or should modify an existing injunction to deter vexatious filings, a court must weigh

all the relevant circumstances, including the following four factors: (1) the party's history of
litigation, in particular whether he has flied vexatious, harassing, or duplicative lawsuits; (2)

whether the party had a good faith basis for pursuing the litigation, or simply intended to harass;
(3) the extent of the burden on ihe courts and other parties resulting from the partys filings; and

(4) the adequacy of alternative sanctions." Id. at 189.

C.

Analysis

"Thebankruptcy court's decision to impose sanctions is discretionary, therefore we review
the exercise of this power for abuse of discretion." Placid Rf
re Terrebonne Fuel

&

Co.

v.

Terrehonne Fuel

& Lube

(in

Lube, 108 F.3d 609, 613, (5th Cir. 1997) Flere, the Bankruptcy Court

awarded Branscomb's sanctions motion, which allowed Branscomb to seek recovery of its fees
and expenses in connection with its defenses of its First Interim Fee Application. Additionally, the

Bankruptcy Court granted trustee's motion for sanctions in the form of a "gatekeeper" order.
Appellants argue that the "sanctions were nothing more than efforts to cover up the fraud and

14

punish the debtors for upholding their duty to report fraud to the proper authorities." Appellants
Mot. to Amend Appellants Br. to Bankr, Orders. 29. Debtors do not provide evidence to support

their allegations that the sanctions were made as an effort to cover up the fraud but rather insinuate
that this is the only logical reason for sanctions to be requested and approved.

While sanctions against pro se plaintiffs are rare, pro se litigants can be sanctioned for
frivolous pleadings.

See Cough/an

v.

Siarkey, 852

F.2d 806, 816 n,i8 (5th Cir. 1988), Here,

appellants have continued to file a number of meritless attacks against appellees. Judge King stated

'it's my opinion that all of these appeals and motions for reconsideration, and Rule 60(b) motions,
and new lawsuits in U.S. District Court are just part of a delay process by Mr. Rozelie, primarily,

and by Ms. Johnson, his mother, secondarily, just an attempt to try to prevent the sale from ever

becoming effective

-

it has closed

-

but to prevent it from becoming effective and to somehow

unravel the sale, and it's just not going to work." Trans. of Aug. 1,2016 at 11-12, This Court finds

that Judge King did not abuse his discretion in awarding sanctions to either Branscomb or trustee
given that no evidence has been presented that suggests his analysis is based on an erroneous

finding of fact or Jaw.
V.

CONCLUSION
For the reasons stated above, this Court finds that the Bankruptcy Court did not err in

granting the following orders: (1) Order Allowing First Interim Application of Branscomb PC, for

Professional Fees and Expenses for Patrick Autry during the Period September 1, 2014 through

October 31, 2015; (2) Order Granting Amended Application to Employ Plunkett & Griesenbeck,
Inc., as litigation Counsel for the Estate; (3) Order Granting Central Texas Realty & Development,

L.L.C.'s Application for Compensation and Reimbursement of Expenses: (4) Order Granting
Motion For Sanctions for Debtor's Attorney Misconduct under Rule 901 1; and; (5) Order Granting

Motion For Sanctions for Debtor's Attorney Misconduct under Rule 9011 filed by Patrick IT. Autry
for Trustee John Patrick Lowe. Therefore, this Court will affirm all five of the Bankruptcy Court's
orders.
A separate order accompanies this mernonmdum opinion.

Royce C. Lamberth
United States District Judge

i)ATE: July

2017

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