Date of Decision:
January 23, 2009
Whether sanctions should be imposed against Debtors and their attorney for an alleged violation of Fed.R.Bankr.P. 9011?
Debtors' legal contention that their accrued but unpaid wages were provisions within the meaning of S.D.C.L. § 43-45-2(6) and their legal contention that their bank accounts were excluded from the bankruptcy estate pursuant to 11 U.S.C. § 541(d) and S.D.C.L. §§ 55-1-6 through -11 were not warranted by existing law, and Debtors failed to make a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law. Debtors and their attorney thus violated Fed.R.Bankr.P. 9011(b)(2). The Court could not impose monetary sanctions against Debtors for their violations of Rule 9011(b)(2) because they were represented by an attorney, Fed.R.Bankr.P. 9011(c)(2)(A), but it imposed a monetary sanction of $1,000 against their attorney for his violations of Rule 9011(b)(2).
Full Bankruptcy Court Decision: