IN RE: COEPTIS EQUITY FUND LLC (2024)

ORDER GRANTING MOTION FOR WITHDRAWAL OF THE REFERENCE TO THE BANKRUPTCY COURT AND MOTION FOR SANCTIONS UNDER 18 U.S.C. § 1927

This Chapter 7 bankruptcy proceeding has been ongoing in bankruptcy court. The Chapter 7 Trustee now moves the district court to withdraw the reference to bankruptcy court for the purpose of considering a motion for sanctions under 28 U.S.C. § 1927. (Dkt. No. 1.) For the reasons stated below, the motion to withdraw the reference is GRANTED for that limited purpose, and the corresponding motion for sanctions is GRANTED.

I. FINDINGS OF FACT 1

A. Initial Bankruptcy Court Orders

On October 27, 2021, attorney Stratton Barbee, on behalf of Debtor Coeptis Equity Fund LLC, filed a Chapter 11 bankruptcy petition for reorganization, electing to proceed under Subchapter V. (Maher Decl., Exh. A at 3.) Pursuant to § 1183(a), a Subchapter V Trustee was appointed on October 28, 2021. (Id. at 4.) Mr. Barbee filed a related Chapter 11 case on behalf of Debtor's manager, Tyrious Lamont Gates, at the same time that he was representing Debtor. (Id.) The bankruptcy court issued an order to show cause “regarding Mr. Barbee's qualification to represent a Subchapter V debtor and to confirm his admission to appear in the Northern District of California.” (Id.) After the hearing on the order to show cause, the bankruptcy court ordered Mr. Barbee to file a substitution of counsel or associate with co-counsel. (Id.) This order was disregarded by Mr. Barbee. (See id.)

On November 18, 2021, at a status conference, it was revealed that “Debtor had not maintained insurance on its properties, failed to file basic first-day motions, and was possibly unable to employ qualified counsel.” (Id.) In response, the bankruptcy court issued an order to show cause as to why Debtor should not be removed from the role of debtor-in-possession, requiring responses from interested parties by November 29, 2021. (Id.) The bankruptcy court also extended the deadline for Mr. Barbee to file substitution or association of counsel to that same date. Both deadlines were disregarded by Mr. Barbee. (Id. at 5.)

Trustee filed a response to the order to show cause, requesting that Debtor be removed as debtor-in-possession. (Id.) Trustee stated that “Mr. Gates supplied evidence of insurance for the Daly City Property, proof of expired insurance for the Denham Springs Property, and no evidence of insurance for the Stockton Property,” Debtor failed to “account for postpetition rents,” and “Mr. Gates refused to respond to routine inquiries” from the Trustee at a meeting with creditors. (Id.) On December 1, 2021, the bankruptcy court entered an order (the “Removal Order”) removing Debtor as debtor-in-possession and appointing Trustee to perform the duties required by § 1183(b). (Id.) Mr. Barbee did not file a motion for reconsideration or notice of appeal at that time.

On December 13, 2021, Debtor filed a substitution of counsel to replace Mr. Barbee with a different attorney, Mr. Marc Voisenat. (Id. at 6.) On April 7, 2022, Debtor filed a subsequent petition to re-substitute Mr. Barbee back in as a replacement for Mr. Voisenat. (Id.) The second motion for substitution of counsel required court approval. (Id.) On May 3, 2022, the bankruptcy court granted the motion, thereby substituting Mr. Voisenat with Mr. Barbee. (Id.) Between December 13, 2021 and May 3, 2022, Mr. Voisenat was counsel of record for the case.

On April 15, 2022, during the period where Mr. Voisenat was counsel of record, Trustee filed a motion to convert the case from a Chapter 11 to Chapter 7 proceeding, arguing cause existed “under § 1112(b) because Debtor lacked the means to reorganize, failed to propose a plan within the deadline of § 1189(b), and had no reasonable likelihood of rehabilitation.” (Id.) Trustee also argued that conversion was in the best interest of creditors “because it would allow for an orderly liquidation and distribution” process. (Id.) And lastly, Trustee noted that Mr. Gates was not cooperating with the proceedings by refusing to “answer basic questions or respond to requests for information” and to “turn over postpetition rents [and] ․ bank statements.” (Id.) On April 29, 2022, despite not being counsel of record at the time, Mr. Barbee objected to the motion on behalf of Debtor. (Id.) He argued that “Trustee did not properly serve the conversion motion on Debtor until April 28, 2022.” (Id.) The bankruptcy court determined that this was not true, since counsel of record, Mr. Voisenat, was served electronically. (Id. at 8; see also Maher Decl. ¶ 12.) Additionally, Mr. Barbee argued that “the relief sought ․ required the movant to file and serve the motion and notice of hearing at least 28 days prior to the hearing,” which was set for May 6, 2022. (Id. at 6.) Mr. Barbee did not raise any substantive grounds in opposition to the motion. After the hearing, the bankruptcy court entered an order (the “Conversion Order”) granting the motion to convert the case to a Chapter 7 proceeding. (Id.)

B. Motions for Reconsideration

In response, Debtor moved for relief under Rule 60(b) from both the Removal Order and the Conversion Order on May 11, 2022, and May 12, 2022, respectively. (Id. at 7.) Debtor argued that relief from the Removal Order should be afforded because “§ 1185(a) requires a party in interest to request removal,” and thus, the bankruptcy court's sua sponte removal of Debtor as debtor-in-possession was improper. (Id.) In response, the newly appointed Chapter 7 Trustee “cited § 105(a) as the basis of the court's authority to take any action required to be raised by a party in interest.” (Id.) The Trustee also argued that “adequate notice and opportunity to address the order to show cause” existed, but that Debtor had “failed to timely do so.” (Id.) In reply, Debtor rejected the § 105(a) argument, instead arguing that “§ 105(b) prohibits the court from appointing a receiver” and that the “Trustee was a receiver based on the definition of ‘receiver’ cited in [a Ninth Circuit case].” (Id.)

Debtor also argued that relief from the Conversion Order should be afforded because “Trustee did not properly serve the motion and did not provide adequate notice of the hearing.” (Id. at 8.) These arguments mirrored those that Mr. Barbee set forth in his original opposition to the motion for conversion. In response, the Trustee explained that the motion was timely served on Mr. Voisenat, who was Debtor's counsel of record at that point. (Id.) Additionally, Trustee noted that Debtor did not provide any substantive justifications for why the case should not have been converted. (Id.) In reply, Debtor “asserted, erroneously, that Mr. Barbee was substituted as counsel on April 7, 2022.” (Id.) For the first time, Debtor also put forth a substantive argument for why the case should not have been converted, stating that “its failure to obtain insurance was not ‘gross mismanagement’ ” and that Mr. Gates had been cooperative throughout the proceedings. (Id.)

On June 16, 2022, after the hearing on the motions, the bankruptcy court entered orders denying both of Debtor's motions for relief. (Id. at 9.) The court found it had authority to remove Debtor as debtor-in-possession, meaning that the Removal Order was proper. The court also found that “Debtor did not make any substantive arguments why the Conversion Order should be vacated, and [the court had] previously considered and rejected Debtor's procedural arguments.” (Id.) The court also “specifically held that notice and service were proper.” (Id.)

C. Appeals to the Bankruptcy Appellate Panel

Debtor timely appealed both orders denying its motions for reconsideration of the Removal Order and the Conversion Order to the Bankruptcy Appellate Panel (“BAP”). (Maher Decl., Exhs. K, L.) Mr. Barbee filed a single notice of appeal of four orders, including the two previously mentioned appeals and two appeals relating to other matters, possibly to avoid paying four filing fees. (Maher Decl. ¶ 15.) In response, the BAP issued a letter requiring Mr. Barbee to pay the three additional filing fees, since separate notices of appeal for each order are required and the BAP had opened four separate appeals on Debtor's behalf as a result. (Maher Decl., Exh. M.)

On July 18, 2022, before briefing on the appeals had begun, counsel for the Chapter 7 Trustee sent an email to Mr. Barbee explaining that “the Chapter 7 expenses associated with defending the appeals [would] almost certainly consume all of the funds in the estate,” and that “Debtor may want to consider dropping the appeals to avoid further administrative expense.” (Maher Decl., Exh. P.) Mr. Barbee did not respond to the communication. (Maher Decl. ¶ 18; id. Exh. P.)

In his opening briefs for each appeal, Mr. Barbee did not describe how the bankruptcy court had abused its discretion in denying the motions for reconsideration, which he was required to establish in order to prevail on appeal. See In re Kaypro, 218 F. 3d 1070, 1073 (9th Cir. 2000); (Maher Decl., Exhs. Q, R.). Rather, Mr. Barbee's opening briefs reiterated his prior arguments as to why removal and conversion were improper. (Maher Decl., Exhs. Q, R.) Mr. Barbee did not file a reply brief in either appeal. Nor did he comply with Rule 8018(b)(1) of the Federal Rules of Bankruptcy Procedure, which required him to file excerpts of the record as part of his briefing, or Rule 8009(b)(5), which required him to provide a transcript of the prior hearing.

Technically, the orders being appealed were the denials of reconsideration of the Removal Order and the Conversion Order, respectively. However, the BAP clarified the scope of its appellate jurisdiction in its December 12, 2022 opinion, stating:

An appeal from an order denying a motion under Civil Rule 60(b) allows us to review only the correctness of that denial; it does not bring up for review the underlying order. Tennant v. Rojas (In re Tennant), 318 B.R. 869, 866 (9th Cir. BAP 2004). But if a party files a Civil Rule 60(b) motion within 14 days of entry of the underlying order, the time to appeal runs from entry of the order disposing of the Civil Rule 60(b) motion, and a timely appeal give[s] us jurisdiction to review both orders. See Wall St. Plaza, LLC v. JSJF Corp. (In re JSJF Corp.), 344 B.R. 94, 99 (9th Cir. BAP 2006); Rule 8002(b).

(Maher Decl., Exh. A at 11.) Regarding the Removal Order, the BAP concluded it only had jurisdiction to review the order denying the Civil Rule 60(b) motion, since the motion for relief was filed approximately five months after entry of the underlying Removal Order. (Id.) However, because the motion for relief from the Conversion Order was filed within 14 days of the underlying order granting conversion, the BAP determined that it had jurisdiction to review “both orders pertaining to conversion.” (Id.) Accordingly, the BAP concluded that “because both parties address[ed] the merits of the Conversion Order ․ we will consider both the bankruptcy court's order denying the Civil Rule 60(b) motion and the underlying Conversion Order.” (Id. at 12.)

The BAP dismissed both appeals. Regarding the Removal Order, the BAP concluded that no “extraordinary circumstances [existed] that prevented [Debtor] from raising the issue of the court's authority [to remove Debtor as debtor-in-possession] until five months after entry of the Removal Order.” (Id. at 13.) Additionally, the BAP found that “Debtor's argument that the court lacked authority [was] completely baseless” because § 105(a) “plainly states” that “[n]o provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.” (Id.) And finally, the BAP rejected the argument that the Trustee was a “receiver,” which prohibits appointment under § 105(b), since the Trustee was appointed by the United States Trustee as opposed to the bankruptcy court and “her duties and loyalties are statutorily defined by the Bankruptcy Code.” (Id. at 13-14(citing 11 U.S.C. §§ 1183, 323(a), and Kosmala v. Baek (In re Halvorson), 607 B.R. 680, 685 (Bankr. C.D. Cal. 2019) (explaining the differences between the roles, duties, and loyalties of trustees and receivers)).).

Regarding the Conversion Order, the BAP noted that Debtor's opposition to the conversion motion was “based solely on lack of notice and inadequate service.” (Id. at 15.). Although Mr. Barbee did not provide a transcript of the hearing, as was required by Rule 8009(b)(5), the BAP found that this argument was directly refuted by the record. On April 15, 2022, Trustee electronically served Mr. Voisenat, the counsel of record at the time. (Id.) This constitutes effective service on Debtor. Fed. R. Civ. Proc. 5(b)(2)(E); Fed. R. Bankr. Proc. 9036. Trustee also mailed service to Mr. Gates and Mr. Barbee. (Maher Decl., Exh. A at 15.) The BAP similarly concluded that Debtor's argument that it should have been provided with 28-days' notice of the hearing could not prevail. Rule 2002(a)(4) requires a minimum of 21-days' notice where “relief is sought generally.” (Id. at 16 (quoting BLR 9014-1(c)).) Because the BAP concluded that “a motion to convert is a general motion,” it determined that Debtor had “sufficient notice to satisfy due process.” (Id.) And because the Debtor did not put forth any substantive arguments at the hearing, nor was there “any argument or evidence [Debtor] was prevented from presenting to the bankruptcy court at the hearing,” the BAP concluded that the court did not abuse its discretion in entering the Conversion Order. (Id.) Finally, the BAP also concluded that the Debtor “did not demonstrate extraordinary circumstances to justify relief under Civil Rule 60(b)(6),” since it simply reiterated “the same procedural complaint” it made in opposing the Conversion Order. (Id. at 16-17.) Thus, the BAP determined that the bankruptcy court did not abuse its discretion in denying Debtor's motion for relief as well.

D. Appeals to the Ninth Circuit

After the BAP dismissed both appeals, Mr. Barbee appealed to the Ninth Circuit. (Maher Decl. ¶ 24.) Mr. Barbee again did not pay the required filing fees, even after the Ninth Circuit issued two separate orders to show cause regarding the failures of payment. (Id., Exh. U.) Mr. Barbee filed his opening briefs on May 16, 2023, three weeks after the April 21, 2023 deadline for when the briefs were due. (Maher Decl. ¶ 25.) As of the date of filing, Mr. Barbee had yet to pay the filing fees, though he finally did. (Id.) Mr. Barbee also did not file excerpts of record. (Id.) Additionally, Mr. Barbee's briefs “did not conform [to] Ninth Circuit requirements and were not accepted for filing” as a result. (Id. ¶ 26.) After requesting a number of extensions, Mr. Barbee filed his opening brief in the appeal of the Removal Order on August 16, 2023 and his opening brief in the appeal of the Conversion Order on September 14, 2023. (Id. ¶¶ 26-27, 29.) Mr. Barbee did not file a reply brief in either appeal. (Id. ¶ 31.)

Both opening briefs reiterated the same arguments that were briefed below. (Id., Exhs. W, Y.) Regarding the Removal Order, Mr. Barbee did not address the jurisdictional bar to contesting the underlying order, as identified by the BAP. Regarding the Conversion Order, Mr. Barbee again repeated the previously refuted claim that there was lack of notice as to the motion.

The Ninth Circuit issued two separate memoranda, (1) one dismissing the appeal of the order denying reconsideration of the Removal Order and (2) another dismissing the appeal of the Conversion Order and the associated denial of reconsideration. (Id. ¶ 32.) In the appeal relating to the Removal Order, the Ninth Circuit found that “[b]ecause [Debtor] could have made its arguments to the bankruptcy court before entry of final judgment, it did not establish extraordinary circumstances.” (Id., Exh. AA at 5.) But even if it could, the Ninth Circuit found that the Debtor's arguments “lack[ed] merit” for the same reasons the prior courts identified. (Id.) And in the appeal relating to the Conversion Order, the Ninth Circuit found that service on the counsel of record and the 21-days' notice provided were both sufficient. (Id., Exh. BB at 3.) It also found that the Debtor did not establish “extraordinary circumstances” justifying reconsideration. (Id. at 6.) Thus, the Ninth Circuit dismissed both appeals.

E. Request for Withdrawal of Reference and Sanctions

Based on these proceedings, Chapter 7 Trustee now moves for withdrawal of the reference to bankruptcy court for the purpose of determining sanctions under 28 U.S.C. § 1927. (Dkt. No. 1.) This motion was filed on August 20, 2024. Mr. Barbee filed no response, even after the Court issued an order to show cause on September 9, 2024. (Dkt. No. 2.) Trustee's theory is that Mr. Barbee filed this action to cause delay in the Chapter 7 Trustee's administration of the case, to harass both the Subchapter V and Chapter 7 Trustees, and for the purpose of draining the remaining funds as to prevent distribution to remaining claimants, including the Subchapter V Trustee. (Dkt. No. 1 at 14-15.)

II. CONCLUSIONS OF LAW

A. Motion for Permissive Withdrawal of Reference

“District courts, rather than bankruptcy courts, have original jurisdiction over all bankruptcy matters.” In re Tamalpais, 451 B.R. 6, 8 (N.D. Cal. 2011) (citing 28 U.S.C. § 1334(b)). District courts may refer bankruptcy matters to bankruptcy court. However, under 28 U.S.C. § 157(d), even after referring a case to bankruptcy court, a “district court may withdraw, in whole or in part, any case or proceeding referred under this section, on its own motion or on timely motion of any party, for cause shown.” In analyzing whether cause has been shown, district courts consider the “efficient use of judicial resources,” the “delay and costs to the parties,” the “uniformity of bankruptcy administration,” “the prevention of forum shopping,” and “other related factors.” Sec. Farms v. Int'l Brother of Teamsters, Chauffeurs, Warehousemen & Helpers, 124 F.3d 999, 1008 (9th Cir. 1997) (citing In re Onion Pictures Corp., 4 F.3d 1095, 1101 (2d Cir. 1993)). Additionally, withdrawal of a reference may be mandatory or permissive. Regardless, “[t]he burden of persuasion is on the party seeking withdrawal.” In re Tamalpais, 451 B.R. at 8 (citing Hawaiian Airlines, Inc. v. Mesa Air Grp., Inc., 355 B.R. 214, 218 (D. Haw. 2006)). The Trustee is seeking permissive withdrawal of the reference.

Here, the Trustee is requesting withdrawal of the reference for the limited purpose of determining whether sanctions under 28 U.S.C. § 1927 should be imposed against Mr. Barbee. An analysis of the factors listed above suggests that withdrawal of the reference for this limited purpose is appropriate. Critically, Ninth Circuit precedent dictates that bankruptcy courts do not possess the authority to impose sanctions under § 1927 in the first place. Section 1927 states, “[a]ny attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.” This provision has been interpreted to mean that only courts of the United States are permitted to impose sanctions. In re Sandoval, 186 B.R. 490, 495 (BAP 9th Cir. 1995). And although there is a split amongst the circuits, the Ninth Circuit has adopted the majority view that “bankruptcy courts are not ‘courts of the United States.’ ” Id. at 496 (citing In re Perroton, 958 F.2d 889, 896 (9th Cir. 1992) (interpreting 28 U.S.C. § 451, which defines “court of the United States”)). Thus, bankruptcy courts “seemingly lack[ ] the authority to award sanctions under 28 U.S.C. § 1927.” Id.

This holding makes the rest of the analysis rather straightforward. If bankruptcy courts lack the inherent authority to impose sanctions under § 1927, then the matter must necessarily be withdrawn to district court in order to be resolved. There is no more efficient way to resolve the dispute, and to wait to resolve the issue would only impose undue delays and costs to the parties. Additionally, because no bankruptcy court has jurisdiction to entertain the particular issue, concerns regarding the prevention of forum shopping are not implicated. There is similarly little risk that the withdrawal of the reference for the limited purpose of determining sanctions would disrupt the uniformity of bankruptcy administration, since sanctions cannot be awarded by the bankruptcy court. Permissive withdrawal of the reference for the limited purpose of deciding the motion for sanctions is appropriate.

B. Motion for Sanctions Under 28 U.S.C. § 1927

Under § 1927, the court may impose sanctions where it finds an attorney acted in bad faith to vexatiously multiply the litigation. “Bad faith is present when an attorney knowingly or recklessly raises a frivolous argument, or argues a meritorious claim for the purpose of harassing an opponent.” Estate of Blas v. Winkler, 792 F.2d 858, 860 (9th Cir. 1986) (internal citations omitted). Courts consider arguments “that are ‘baseless and made without reasonable and competent inquiry’ or [are] made up of ‘legal or factual contentions so weak as to constitute objective evidence of improper purpose’ ” to be frivolous. Caputo v. Tungsten Heavy Powder, Inc., 96 F.4th 1111, 1155 (9th Cir. 2024) (quoting In re Girardi, 611 F.3d 1027, 1062 (9th Cir. 2010)). Under the statute, the sanctionable conduct is limited to that which multiplies the proceedings in the case, and thus, § 1927 does not apply to the initial pleadings.

This motion for sanctions is suitable for determination without oral argument pursuant to Civil Local Rule 7-1(b). Mr. Barbee has not responded to the motion despite the Court's order to show cause why the motion should not be granted. Due process requires only that Mr. Barbee be given an “opportunity to brief the issue,” which “does not require an oral or evidentiary hearing.” Pac. Harbor Cap., Inc. v. Carnival Air Lines, Inc., 210 F.3d 1112, 1118 (9th Cir. 2000). Here, the record is based on court documents from the appeals and underlying bankruptcy action, and does not raise contested issues that would require an evidentiary hearing. For all these reasons, there is no practical purpose to holding a hearing, which would cause the parties to incur even more costs. Accordingly, the Court proceeds to decide the motion on the papers submitted.

1. BAP and Ninth Circuit Appeals Regarding Reconsideration of the Removal Order

There is sufficient evidence in the record that Mr. Barbee vexatiously multiplied the litigation in both the BAP and the Ninth Circuit appeals concerning the bankruptcy court's order denying reconsideration of the Removal Order. Both those appeals were frivolous, and sanctions are warranted.

In his opening brief to the BAP, Mr. Barbee made no attempt to address the bankruptcy court's order denying reconsideration of the motion, but instead rearticulated the same arguments addressing the merits of the underlying Removal Order. The only new argument raised by Mr. Barbee was that, even if the bankruptcy court had the authority to appoint a Trustee, the Debtor was not provided with sufficient time to respond to the order to show cause for why removal was proper. But that argument was likewise barred: because the window to appeal the underlying order had passed, the BAP's jurisdiction was limited to reviewing the denial of the motion for reconsideration, as it made clear in its opinion. Thus, Mr. Barbee was required to demonstrate how the bankruptcy court abused its discretion in denying the motion for reconsideration. He made no attempt to do so.

Moreover, in his argument addressing the merits of the underlying Removal Order, Mr. Barbee offered no response to the bankruptcy court's explanation that § 105(a) makes clear that the court may act sua sponte in removing an entity as debtor-in-possession. In ruling on the motion to reconsider, the bankruptcy court clearly articulated why § 105(a) barred the challenge to the court's authority to order the removal, and additionally, why § 105(b)'s exception prohibiting the appointment of a receiver did not apply. Mr. Barbee nonetheless rearticulated the same arguments to the BAP without substantively modifying them or responding to the bankruptcy court's ruling, thereby pointlessly multiplying the litigation.

In the appeal that Mr. Barbee took to the Ninth Circuit, he again reiterated the same arguments. And similarly, there was no attempt made to address the ruling issued by the BAP, including regarding the jurisdictional bar to reviewing the merits of the underlying order that the BAP clearly identified. This, again, resulted in the multiplying of litigation without good reason.

2. BAP and Ninth Circuit Appeals Regarding Conversion Order

Mr. Barbee's arguments regarding the Conversion Order were similarly frivolous and suggestive of a bad faith intent to harass. Although the BAP determined that it had jurisdiction to review the merits of the underlying order, in addition to the order denying reconsideration of the motion, Mr. Barbee's arguments again focused on lack of notice and ineffective service. However, the record expressly established that the counsel of record was served 21 days prior to the hearing, as was required, and Mr. Barbee's argument was rejected by the bankruptcy court in its order on the motion to reconsider. Thus, Mr. Barbee already knew that this argument was contrary to the record when he chose to repeat the argument to the BAP without supplying further analysis or reasoning for why the BAP's conclusions were incorrect. Mr. Barbee also articulated these same false claims regarding lack of notice to the Ninth Circuit in his subsequent appeal. That is strongly indicative of an attempt to recklessly multiply the proceedings in bad faith.

3. Overall Bad Faith Intent to Harass

Without more, a party's repetition of losing arguments on appeal is generally not enough to warrant a finding of bad faith. However, Mr. Barbee's conduct stands out because he repeatedly filed briefs that lacked even a sliver of meritorious argument concerning the decision being appealed.

Moreover, circumstantial evidence supports an inference that Mr. Barbee had a bad faith intent to harass in filing these frivolous appeals. As described in the findings of fact, Mr. Barbee was specifically told of the limited surplus funds remaining in the estate, a fact of which he was likely already aware based on his role as counsel for Debtor. Although he was on notice that driving up attorneys' fees would likely drain the remaining funds and prevent payment of the Trustee's fees, Mr. Barbee took actions that drove up the litigation costs through multiple appeals, while going to great lengths to minimize his own costs. Mr. Barbee tried to evade payment of multiple appellate filing fees, failed to file excerpts of record and a hearing transcript, filed appellate briefs with minimal changes from the original briefs in the underlying litigation, and declined to file reply briefs in any of the appeals. Those actions suggest that the purpose of Mr. Barbee's appeals was not to prevail, but instead to harass the Trustee and increase the costs of litigation to the point of depriving the Trustee of fees, all while minimizing his own costs. On this record, sanctions are warranted.

4. Calculation of Attorneys' Fees

Finding that sanctions are warranted in this case, the only remaining question is one of amount. Trustee's counsel has attested that the fees to litigate amounted to $32,600.50. This figure represents the sum total between the costs to litigate at the BAP, which amounted to $16,830, and the costs to litigate at the Ninth Circuit, which amounted to $15,5770.50. (Maher Decl., Exh. CC.) After reviewing the billing invoices, which included detailed billing descriptions, the hours expended appear reasonable. Counsel spent 30.6 hours defending the BAP appeals and 26.5 hours defending the Ninth Circuit appeals, for a total of 57.1 hours. (Id.) Although counsel's arguments opposing the appeals were essentially the same in each appeal, the different procedural posture of each appeal required a different description of the history and relevant legal standard at each stage.

However, there is insufficient information contained in the declaration to determine if the hourly rate requested is reasonable. Thus, comparators will be used to determine a reasonable hourly rate. In other cases, hourly rates ranging from $425 to $475 were deemed reasonable for similarly experienced bankruptcy specialists. See, e.g., In re Atkins, 640 B.R. 687, 702 (Bankr. E.D. Cal. 2022) (authorizing $475.00 per hour for similarly experienced bankruptcy specialist working in the San Francisco Bay Area and Sacramento); In re Colbert, No. 19-41729 CN, 2022 WL 17343492, at *5 (Bankr. N.D. Cal. Nov. 30, 2022) (authorizing $425.00 per hour for similarly experienced bankruptcy specialist in Oakland). Taking into account the increase in billing rates generally since the fees at issue were incurred in those comparable cases, the Court concludes that $500 per hour is a reasonable rate. The total amount of sanctions is therefore $28,550.

III. CONCLUSION

Based on the foregoing analysis, the motion to withdraw the reference is granted solely for the limited purpose of determining the motion for sanctions. The motion for sanctions under § 1927 is granted. Mr. Barbee is ordered to pay $28,550 to the bankruptcy estate. The matter is otherwise returned to the bankruptcy court.

IT IS SO ORDERED.

RITA F. LIN United States District Judge