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 Contributing Editor: Christopher Wilcox, Christensen Law Office PLLC
Eighth_Circuit___Briggs_v__Reed.pdf

In Briggs v. Reed, No. 17‑1143 (8th Cir. April 25, 2018), the Eighth Circuit Court of Appeals affirmed the district court’s judgment affirming the bankruptcy court’s order sanctioning the appellant, an attorney, for contempt of an order compelling turnover and for misleading the court. The Appellate Court likewise affirmed a ruling that appellant’s request for reinstatement to practice before the bankruptcy court was properly denied.

Appellant had agreed to represent approximately 100 clients of another attorney who had been suspended from practicing law in the bankruptcy court for the eastern district of Missouri. In connection with an order to show cause on the disgorgement of the former attorney’s fees, the trustees were ordered to provide the court with specific information about the fees. The trustees sent appellant demands for documents and information and later moved to compel the turnover of documents to comply with the court’s order to show cause. The bankruptcy court then ordered turnover and subsequently sanctioned appellant for failure to comply with the turnover order and for deliberately and with deceptive intent making misleading representations to the court, relying, in part, on appellant’s prior disciplinary records. The sanctions order allowed appellant to move for reinstatement. Appellant requested reinstatement from the chief bankruptcy judge and, when that request was denied, from the chief district court judge.

The Eighth Circuit rejected appellant’s argument that the sanctions order was unconstitutional under Stern v. Marshall, 564 U.S. 462 (2011). The court also rejected appellant’s argument that the record did not support a contempt finding for failure to comply with the turnover order because appellant was ordered to seek documents from third parties and the bankruptcy court’s contempt order adequately established that Appellant had failed to adequately do so. Relying on Schlaifer Nance & Co. v. Estate of Warhol, 194 F.3d 323, 335 (2d Cir. 1999), the Eighth Circuit determined that the bankruptcy court erred in sanctioning appellant for deliberately misleading the court because the bankruptcy court based that conclusion on disputed questions of fact without holding an evidentiary hearing. However, because the bankruptcy court had two independent bases for the sanctions order, remand was not compelled. The Eighth Circuit also rejected appellant’s argument that the request for reinstatement to practice was improperly denied because appellant had not made the request to the bankruptcy judge who issued the order of suspension; neither the chief bankruptcy judge nor the chief district court judge were permitted to resolve appellant’s request. Rather, appellants remedy was to make the request by motion directly to the bankruptcy judge and subsequently appeal if the motion for reinstatement were denied.