Pratt 2008 WL 933633 (5th Cir.(Tex.))

Creditor's informal warning letters did not satisfy Rule 9011's service requirement.

Addressing an issue of apparent first impression for the circuit, the Fifth Circuit Court of Appeals has held that informal warning letters that a creditor sent to counsel for the Chapter 7 debtor prior to filing its motion for Rule 9011 sanctions with the bankruptcy court did not satisfy the service requirement of F.R.B.P. 9011. The plain language of Rule 9011 mandates that the movant serve the respondent with a copy of the motion before filing it with the court, the Court of Appeals explained, and there was no indication in Rule 9011, Rule 11, or the advisory notes to support the creditor's contention that a motion for sanctions may be filed with the court without serving the respondent with a copy at least 21 days in advance. Although the Seventh Circuit had awarded sanctions under Rule 11 even though the defendant had sent the respondent only a "letter" or "demand" and not a copy of the motion for sanctions, the Fourth, Eighth, Tenth, and Eleventh Circuits had required service of a copy of the Rule 11 motion, the Court of Appeals noted

In re Denver Cmmnty Development Credit Union Case No: 04-23761

This case comes before the Court on the Denver Community Federal Credit Union’s [the
“Credit Union”] Motion for Sanctions Pursuant to FED. R. BANKR. P. 9011 [the “Motion”]; United States Trustee’s Statement in Support of Motion for Sanctions; and the responses filed by the Association. The Court held a hearing on September 22, 2004. Denver Community Federal Credit Union, successor in interest to Denver Community Development Credit Union, appeared through counsel Brian J. Holst; Bruce Randolph Merchants & Civic Association, Inc. appeared through counsel Kristal Bernert; The United States Trustee appeared through Leo Weiss; Thomas Foster appeared pro se; and Kristal Bernert appeared pro se. The Motion prays for sanctions to be assessed against Kristal Bernert, attorney for the Association, and against Thomas Foster, a board member of the Association. Sanctions are sought both under FED. R.
BANKR. P. 9011 and under 11 U.S.C. § 303(i).

Date of decision: 10/5/04


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