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In re Baroni

United States District Court, C.D. California

March 23, 2017

In re ALLANA BARONI, Debtor,
BANK OF NEW YORK MELLON, et al., Defendants and Appellees. ALLANA BARONI, Plaintiff and Appellant, Bankruptcy No. 1:12-bk-10986-MB Adversary No. 1:13-ap-1070-MB



         Before the Court is an appeal filed by counsel for plaintiff and appellant Allana Baroni (“Baroni”) challenging an order issued by the United States Bankruptcy Court for the Central District of California. That order granted a Motion for Sanctions brought pursuant to Federal Rule of Bankruptcy Procedure 9011 by defendants and appellees Green Tree Servicing LLC (now known as Ditech Financial LLC), Bank of America, N.A., Bank of America Corporation, and the Bank of New York Mellon (formerly known as the Bank of New York) as successor indenture trustee to JPMorgan Chase Bank, N.A. for CWHEQ Revolving Home Equity Loan Trust, Series 2005-D (collectively, the “Banks” or “Defendants”).

         I. Factual and Procedural Background

         According to the docket in Bankruptcy Case No. 1:12-bk-10986-MB, Baroni filed a bankruptcy petition on February 1, 2012. Baroni commenced an adversary proceeding against the Banks on April 13, 2013. Baroni contends in the adversary proceeding that the Banks do not possess an interest in a mortgage loan she obtained. The Banks filed, on January 12, 2016, a Motion to Compel in the adversary proceeding seeking responses from Baroni to interrogatories and requests for production of documents they had propounded. At the time the Banks filed the Motion to Compel, Baroni was represented by Louis Esbin and Michael Riley. At the January 21, 2016 hearing on the Motion to Compel, the Bankruptcy Court granted the Motion to Compel, ordered Baroni to provide responses to the discovery propounded by the Banks, awarded the Banks their reasonable attorneys' fees as set forth in their Motion to Compel, and ordered Baroni to file a brief challenging the reasonableness of the requested fees by no later than February 5, 2016. The Bankruptcy Court additionally allowed the Banks until February 12, 2016, to file a response.

         Baroni's did not file a brief on the day it was due. Instead, Richard Antognini sent an email to Defendants' counsel stating that he intended to substitute in as co-counsel for Baroni in place of Mr. Esbin. Mr. Antognini's email attached a copy of Baroni's brief concerning the reasonableness of the fees incurred by the Banks in bringing their successful Motion to Compel. On February 12, 2016, the Banks filed their responsive brief. The filing by the Banks included a copy of the brief Baroni had emailed to the Banks but not filed with the Bankruptcy Court. Also on February 12, 2016, Mr. Antognini filed a substitution of attorney with the Bankruptcy Court. The Bankruptcy Court entered an order awarding $9, 409.26 in attorneys' fees and costs to Defendants for the costs incurred in bringing the Motion to Compel on February 24, 2016.

         On March 7, 2016, Baroni filed a “Motion for Relief from the Order Compelling Plaintiff, Reconsideration of the Order Awarding Attorneys' Fees for Bringing Motion to Compel, or in the Alternative Request for Certification for Appeal and Stay Pending Appeal” (the “Motion for Relief”). On March 18, 2016, Defendants sent to Baroni's counsel a letter pursuant to the safe harbor provision of Federal Rule of Bankruptcy Procedure 9011, enclosing a Motion for Sanctions that Defendants intended to file if Baroni did not withdraw her Motion for Relief by April 8, 2016. When Baroni did not withdraw her Motion for Relief by that date, Defendants filed their Motion for Sanctions.

         The parties briefed both the Motion for Relief and the Motion for Sanctions and the Bankruptcy Court conducted a hearing on both Motions on April 29, 2016. At that hearing, the Bankruptcy Court denied Baroni's Motion for Relief and granted the Motion for Sanctions. During the hearing, the Bankruptcy Court stated:

Ms. Baroni may not like the order [on the Motion to Compel]. She may think I'm wrong, but I don't think there's any question that this Court has jurisdiction to enter that order. And so I'm really perplexed not only at her lack of compliance, but at this motion of reconsideration. There's been no change in the law. There have been no newly discovered facts that alter my decision on a discovery dispute.

(Excerpts of Record (“ER”) Vol. 4, 975:15-21.) The Bankruptcy Court also stated:

I don't think that your client has been deprived of due process. I think she's getting a lot of due process actually. And I don't see that you've as a threshold met the requirements for reconsideration.

(Id. at 976:7-10.) The Bankruptcy Court then concluded that for purposes of the Motion for Sanctions, Baroni's Motion for Relief was frivolous and that the sanctions requested by the Banks should be assessed against Baroni's counsel rather than against Baroni herself:

I don't think I have enough of a record to discern what the purpose was. I mean, in some ways, you know, otherwise sort of every frivolous motion is tactical. So I'm not going to, at this point, I'm not going to go that far . . . I don't know what the purpose was, but it was not well taken. It was frivolous and so I'm going to, at this point, based on the record I have before me limit [the sanctions] to the attorneys.

(Id. at 982:7-15.) The Bankruptcy Court entered orders denying the Motion for Relief and granting the Motion for Sanctions on August 18, 2016. The order granting the Motion for Sanctions states:

The Court, finding that service was proper, and adopting the findings of fact and conclusions of law made at the hearing, finds and concludes that the claims, defenses, and other legal contentions raised in the Motion for Relief were not warranted by existing law or by a nonfrivolous argument for extension, modification, or reversal of existing law or the establishment of new law. The Court further finds and concludes that the attorneys' fees and costs sought by ...

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