## Facts

- James and Katherin Spickelmier (including Dr. Spickelmier) filed a consumer bankruptcy case in the U.S. Bankruptcy Court for the District of Nevada, represented by Barry Levinson & Associates (the Levinson firm).
- The Levinson firm initially filed a petition under a bankruptcy chapter for which Dr. Spickelmier was not eligible.
- The firm negotiated a conversion to a chapter for which Dr. Spickelmier was eligible, but the firm did not comply with the conversion’s terms, and the case was dismissed.
- A creditor, Bank of Nevada, had moved to dismiss or convert the case during the proceeding.
- After dismissal, the Levinson firm filed a motion for reconsideration but did not appear at the hearing on that motion.
- The firm then filed a motion for an order shortening time (OST) that was identical to an earlier request the court had already denied.
- The bankruptcy court issued an Order to Show Cause (OSC) under Federal Rule of Bankruptcy Procedure 9011, putting the Levinson firm and its attorneys on notice that sanctions—including disgorgement of fees paid by the debtor—were being considered.
- At the OSC hearing, Jeremy Mondejar of the Levinson firm appeared about 15 minutes late and was unprepared; he was unfamiliar with what had been filed and could not explain or justify the firm’s repeated failures, including the duplicative OST motion.

## Issues

1. Did the Levinson firm and its attorneys violate Federal Rule of Bankruptcy Procedure 9011(b)(2) by filing and presenting a frivolous OST motion and supporting papers that repeated relief the court had already denied?
2. If a Rule 9011 violation occurred, what sanctions were appropriate, including whether the court could order disgorgement of attorneys’ fees paid by the debtor?

## Decision

- The court found that the Levinson firm, through its attorneys, violated Federal Rule of Bankruptcy Procedure 9011(b)(2) because the OST motion and supporting affidavit were frivolous.
- The court determined that the firm’s overall handling of the case reflected serious deficiencies in representing the debtors, including filing under an ineligible chapter, mishandling the conversion process, failing to appear at a hearing, and filing duplicative post-dismissal papers.
- The court imposed sanctions designed to deter repetition of the conduct.
- As part of the санкctions, the court ordered disgorgement of attorneys’ fees paid by the debtor and imposed additional remedial measures described in the opinion.

## Legal Principles

- Under Fed. R. Bankr. P. 9011(b)(2), an attorney who presents a paper to the court certifies that the legal contentions are warranted by existing law or by a nonfrivolous argument for changing the law; papers lacking a reasonable legal basis may be sanctioned.
- A court may issue a Rule 9011 order to show cause on its own initiative and, after notice and an opportunity to be heard, may impose sanctions for violations.
- Rule 9011 sanctions must be tailored to deter repetition or comparable conduct and may include monetary and nonmonetary directives.
- In bankruptcy, the court may order return of attorney compensation when the services provided do not justify the fees charged (including through the court’s authority to review compensation under the Bankruptcy Code), and fee disgorgement may be used where representation is grossly deficient.

## Conclusion

In *In re Spickelmier*, the Bankruptcy Court for the District of Nevada sanctioned the Levinson firm and its attorneys after finding that a duplicative, already-denied OST request was frivolous under Rule 9011(b)(2) and that counsel’s performance across the case fell well below acceptable standards; the court ordered disgorgement of fees paid by the debtor and imposed other measures to deter similar conduct.


In re Spickelmier, 469 B.R. 903 (2012)