Robert Lewis, Jr. v. Marjorie Lynch ( 2015 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1881
In Re: ROBERT LEWIS, JR.,
Appellant.
------------------------------------
DENNIS DARNAY WILLIAMS,
Plaintiff,
v.
MARJORIE K. LYNCH,
Defendant – Appellee,
JAMES B. ANGELL,
Party-in-Interest - Appellee.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. Terrence W. Boyle,
District Judge. (5:13-cv-00696-BO)
Submitted: April 28, 2015 Decided: June 9, 2015
Before KEENAN, WYNN, and DIAZ, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Robert Lewis, Jr., LEWIS LAW FIRM, Raleigh, North Carolina, for
Appellant. Brian C. Behr, OFFICE OF THE BANKRUPTCY
ADMINISTRATOR, Raleigh, North Carolina; James B. Angell,
Nicholas C. Brown, HOWARD, STALLINGS, FROM & HUTSON, PA,
Raleigh, North Carolina, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
Robert Lewis, Jr., appeals from the district court’s order
affirming the order of the bankruptcy court partially suspending
him from practicing in the bankruptcy court, ordering the
disgorgement of undisclosed attorney fees received, and imposing
a $2500 monetary sanction. He also appeals from the district
court’s affirmance of the bankruptcy court’s order reinstating
his bar privileges after an additional term and upon Lewis’
compliance with the sanctions order. We affirm.
During the investigation of a debtor in bankruptcy, the
Bankruptcy Administrator (“BA”) identified several discrepancies
within the debtor’s bankruptcy schedules and between the
debtor’s statements and those prepared by his attorney, Robert
Lewis, particularly with respect to fees paid to Lewis. After
further investigation, the BA filed a report of Lewis’ alleged
misconduct and moved for sanctions to be imposed against Lewis
for violating the requirement of full disclosure of fees in
bankruptcy cases. The BA also asserted numerous other
violations by Lewis, including the acceptance of more than $6000
from the debtor, purportedly toward attorney’s fees for
prepetition civil litigation of which the debtor denied
knowledge; continuing to represent the debtor without approval
from the bankruptcy court after conversion of the debtor’s case
to Chapter 11; violating the rule against “ghost-writing” appeal
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documents for the debtor; and failing to maintain copies of
filed documents that contain an original signature. The
Chapter 7 Trustee also moved for sanctions on these same bases.
After holding hearings on the BA’s and Trustee’s motions
for sanctions, the bankruptcy court determined that sanctions
were appropriate and temporarily suspended Lewis from initiating
new bankruptcy cases on behalf of clients in the Bankruptcy
Court for the Eastern District of North Carolina until December
14, 2013. With respect to existing clients, Lewis was
authorized to continue his representation, but was required to
submit monthly reports to the court and to the BA, certifying
that he was the attorney of record and disclosing all
compensation paid or to be paid to him for his services in
connection with his pending bankruptcy cases. The court ordered
Lewis to pay $2500 in sanctions and to disgorge $8400 in fees.
The court additionally ruled that Lewis’ reinstatement to
practice was conditioned on his full compliance with the court’s
order. The court warned Lewis that failure to fully comply will
result in more severe sanctions.
During the hearing on Lewis’ reinstatement, the bankruptcy
court found that Lewis had not fully complied with the sanctions
order. The court directed that Lewis’ privilege to practice
before the bankruptcy court would be reinstated on May 19, 2014,
provided that, before that date, Lewis paid the sanctions and
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disgorged the fee amount, as required by the court’s original
sanctions order. The court also ordered that the heightened
reporting requirements imposed on Lewis in the original
sanctions order would continue for all new bankruptcy cases
filed by Lewis.
Lewis appealed from the sanctions order and from the
reinstatement order. The district court affirmed the bankruptcy
court’s rulings. Lewis noted his appeal to this court,
challenging the authority of the bankruptcy court to order
sanctions, the nature of the sanctions imposed, and the fact
that the bankruptcy court did not issue findings of fact or
conclusions of law. He also argued that the district court
erred by considering the Appellees’ brief filed in the appeal
from the reinstatement order in deciding the issues in the
appeal from the sanctions order and erred by affirming the
bankruptcy court’s disposition without holding oral argument.
Lewis contends that the bankruptcy court lacks authority to
suspend the bar privileges of attorneys who practice in that
court, claiming that only the district court has such authority.
We do not agree.
The bankruptcy court has the inherent power, “incidental to
all courts” to “discipline attorneys who appear before it.”
Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). This inherent
power includes the power to suspend or disbar attorneys from
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practicing before the court. In re Snyder, 472 U.S. 634, 643
(1985). Additionally, the Bankruptcy Code authorizes the
bankruptcy court to “issue any order, process, or judgment that
is necessary or appropriate to carry out the provisions of
[Title 11] or to prevent an abuse of process.” 11 U.S.C.
§ 105(a) (2012); see In re Walters, 868 F.2d 665, 669 (4th Cir.
1989) (upholding under 11 U.S.C. § 105(a), contempt sanctions
based on attorney’s failure to disclose fees, disgorge
unauthorized fees, and obtain authority to represent debtor).
We conclude that the bankruptcy court appropriately determined
that it had the authority to sanction Lewis for his misconduct.
See In re Johnson, 921 F.2d 85, 586 (5th Cir. 1991) (stating
that bankruptcy courts “have both the statutory and inherent
authority to deny attorneys and others the privilege of
practicing before that bar”).
Lewis contends that, pursuant to Stern v. Marshall, 131
S. Ct. 2594 (2011), bankruptcy courts lack authority over
attorney disciplinary matters. In Stern, the Court held that
Congress exceeded the limitation of Article III by identifying
as a “core matter” a state-law counterclaim by a debtor in
bankruptcy against a creditor who had not consented to the
jurisdiction of the bankruptcy court. Id. at 2620. Because the
counterclaim was “in no way derived from or dependent upon
bankruptcy law,” the Supreme Court determined that the
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bankruptcy court could not, in compliance with the Constitution,
enter a final order on that claim. Id. at 2618.
We think Lewis’ situation is distinguishable. The basis
upon which the bankruptcy court imposed sanctions was Lewis’
violation of bankruptcy law and procedures and his misconduct in
the bankruptcy court. The bankruptcy court clearly had
jurisdiction over this matter based on the fact that Lewis
voluntarily presented himself in the bankruptcy court as an
attorney and officer of the court, and because, unlike the
counterclaim in Stern, the bases upon which the sanctions were
imposed arose from, and were dependent upon, the bankruptcy
proceeding. Lewis next argues that the sanctions imposed were
in the nature of punishment and therefore amounted to criminal
contempt and were imposed in violation of his due process
rights. We disagree. A contempt sanction is criminal if “it is
imposed retrospectively for a ‘completed act of disobedience’.”
Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S.
821, 829 (1994). Contempt sanctions are civil in nature if the
purpose is to coerce compliance with a court order or to
compensate another party for losses sustained. Id. Suspension
of an attorney from the practice of law is generally deemed a
civil penalty, imposed to coerce compliance with the rules of
the court. See Ex parte Wall, 107 U.S. 265, 288 (1883); In re
Liotti, 667 F.3d 419, 430-31 (4th Cir. 2011). We conclude that
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the sanctions imposed on Lewis were within the bankruptcy
court’s authority and that the court appropriately imposed civil
sanctions partially suspending him from practicing in the
bankruptcy court, requiring the disgorgement of unauthorized
fees, imposing a monetary sanction, and conditioning his
reinstatement upon fulfilling the sanction order. See Bagwell,
512 U.S. at 829.
We also do not think the district court erred in its
consideration of Lewis’ appeal. First, Lewis’ contention that
the district court erred on appeal by not hearing oral argument
is belied by the record, which evidences that the court held a
hearing and Lewis presented argument. Second, we find no abuse
of discretion in the district court’s consideration of the
Appellees’ brief in the reinstatement appeal to resolve issues
in the sanctions appeal. See In re Haberman, 516 F.3d 1207,
1208 n.* (10th Cir. 2008) (allowing consideration of
noncompliant briefs at court’s discretion, provided that
opposing party is not prejudiced); Price v. Digital Equip.
Corp., 846 F.2d 1026, 1028 (5th Cir. 1988) (same).
Lastly, Lewis contends that the district court erred by
upholding the bankruptcy court’s ruling where the bankruptcy
court did not expressly state findings of fact and conclusions
of law. Because Lewis failed to raise this argument in the
district court, it is waived on appeal. See In re Wallace &
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Gale Co., 385 F.3d 820, 835 (4th Cir. 2004) (on appeal from
bankruptcy court’s ruling, failure to raise argument before
district court results in waiver of argument on appeal “absent
exceptional circumstances”).
In sum, we find no reversible error by either the
bankruptcy court or the district court. Accordingly, we affirm
the district court’s order. We dispense with oral argument
because the facts and legal contentions are adequately presented
in the materials before this court and argument would not aid
the decisional process.
AFFIRMED
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