Sanctions Warranted for Frivolous Appeal after Denial of Recusal Motion: Ninth Circuit | Practical Law

Sanctions Warranted for Frivolous Appeal after Denial of Recusal Motion: Ninth Circuit | Practical Law

In Blixseth v. Yellowstone Mountain Club, LLC, the US Court of Appeals for the Ninth Circuit imposed sanctions on a party and one of its attorneys under Federal Rule of Appellate Procedure (FRAP) 38 and 28 U.S.C. § 1927 for bringing a frivolous appeal in a bankruptcy case.

Sanctions Warranted for Frivolous Appeal after Denial of Recusal Motion: Ninth Circuit

by Practical Law Litigation
Published on 07 Aug 2015 • USA (National/Federal)
In Blixseth v. Yellowstone Mountain Club, LLC, the US Court of Appeals for the Ninth Circuit imposed sanctions on a party and one of its attorneys under Federal Rule of Appellate Procedure (FRAP) 38 and 28 U.S.C. § 1927 for bringing a frivolous appeal in a bankruptcy case.
On August 4, 2015, in Blixseth v. Yellowstone Mountain Club, LLC, the US Court of Appeals for the Ninth Circuit imposed sanctions on a party and one of its attorneys under FRAP 38 and 28 U.S.C. § 1927 for bringing a frivolous appeal in a bankruptcy case (No. 12-35986, (9th Cir. Aug. 4, 2015)).
Timothy Blixseth and his attorneys, including Michael Flynn, made a motion to recuse a bankruptcy judge who had ruled against Blixseth. In the recusal motion, they made 19 accusations of misconduct against the judge. The judge found the accusations to be meritless, and the district court, as well as the Ninth Circuit, affirmed that ruling, finding that Blixseth's accusations were "a transparent attempt to wriggle out of an unfavorable decision by smearing the reputation of the judge who made it." Afterwards, the Ninth Circuit issued an order to show cause as to why Blixseth and his attorneys should not be sanctioned for pressing the appeal.
Based on the responses of Blixseth and Flynn, the Ninth Circuit found that the appeal was frivolous and ordered Blixseth and Flynn to pay the appellee's attorneys' fees and costs in defending the appeal, and for each to pay $500 to the Clerk of Court. The Ninth Circuit held that Blixseth and Flynn had failed once again to support their accusations "with even a shred of credible evidence." Specifically, the court found that Blixseth's personal response was "unresponsive" in part because he:
  • Reasserted his unsupported conspiracy theory advanced throughout the bankruptcy proceedings.
  • Criticized the bankruptcy judge's rulings against him.
  • Hurled a baseless accusation against a judge on the panel.
The Ninth Circuit also sanctioned attorney Flynn under 28 U.S.C. § 1927 for multiplying the proceedings unreasonably and vexatiously in breach of his professional duty of good faith and candor in dealing with the court. The court found that Flynn's conduct was unprofessional and that he acted in bad faith because, among other things, he:
  • Did not retract his inaccurate statements to the court.
  • Made additional accusations against the bankruptcy court but did not offer evidence to support his claims.
  • Improperly relied on facts outside the record.
  • Made an unreasonable omission when proffering evidence.
Regarding Blixseth's four other attorneys, the court concluded that although these lawyers allowed their names to be placed on briefs that presented frivolous and inflammatory arguments, their lack of bad faith cut against sanctioning them. However, the court did note that a finding of bad faith is not necessary to impose sanctions under FRCP 38, and warned the attorneys to act more responsibly in the future.
To avoid sanctions, counsel must proceed with extreme caution when involved with frivolous actions and appeals, even if they are not the lead attorney on the case.