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Steffen v. Kline (In Re Steffen)
Citations: 418 B.R. 471; 22 Fla. L. Weekly Fed. B 129; 2009 Bankr. LEXIS 3465; 2009 WL 3669736Docket: Bankruptcy 8-.01-09988-ALP; Adversary 8:09-ap-00361-ALP
Court: United States Bankruptcy Court, M.D. Florida; October 30, 2009; Us Bankruptcy; United States Bankruptcy Court
The case involves Terri L. Steffen as Plaintiff against Kevin F. Kline and others as Defendants in a bankruptcy proceeding. Steffen filed a lawsuit on February 27, 2009, alleging conspiracy among the Defendants to unlawfully harass her and deprive her of property. Specifically, she claimed Kline and his law firm sent a letter in furtherance of the conspiracy, involving unlawfully obtained bank records. On June 12, 2009, Steffen voluntarily dismissed her case, leading to a pre-trial hearing where the Defendants' motion to dismiss was deemed moot. Subsequently, on July 8, 2009, Kline and his law firm filed a motion for sanctions and attorney's fees against David E. Hammer and his firm, claiming Hammer acted in bad faith. A hearing on this motion occurred on August 13, 2009, where the court found a prima facie case for sanctions against Hammer but needed to determine his good faith. Hammer filed a motion on August 20, 2009, to continue the sanctions hearing to allow time to hire special counsel. The current motion under consideration is Hammer's request to vacate the court's order related to the sanctions against him. On August 24, 2009, the Court issued an order regarding the Defendants' Motion for Sanctions and scheduled an evidentiary hearing for August 25, 2009. Subsequently, the hearing was rescheduled to October 6, 2009, following Hammer's Unopposed Motion to Continue. On September 3, 2009, Hammer filed a new Motion, and on September 9, 2009, the Court scheduled a hearing for this Motion to Vacate on the same date as the evidentiary hearing. The Court previously recognized that a debtor can dismiss a lawsuit by filing a notice of dismissal under Fed. R. Civ. P. 41, as adopted by Fed. R. Bankr. P. 7041(a)(1), which allows dismissal without a court order before the opposing party serves an answer or motion for summary judgment. However, the Court noted concerns regarding the timing of the Debtor's Notice of Voluntary Dismissal, which was filed shortly before a hearing on a Motion to Dismiss. Hammer's argument that this dismissal stripped the Court of jurisdiction to impose sanctions was found to be erroneous. He cited Williams v. Ezell to support his position; however, the Court clarified that this case did not address the issue of jurisdiction regarding sanctions post-dismissal. The Court referenced Cooter & Gell v. Hartmarx Corp., indicating that federal courts retain jurisdiction to address collateral issues such as sanctions even after a case has been dismissed. The Eleventh Circuit also affirmed that a district court can rule on sanctions despite the original case being no longer pending. The court clarified that sanctions are not judgments on the merits but rather assessments of whether an attorney has misused the judicial process. Citing case law, it noted that Rule 11 motions relate to issues that are separate from the merits of an appeal and can be filed even after a court loses jurisdiction over the main case. The court retained jurisdiction to award attorney's fees post-remand, and bankruptcy courts also possess the authority to impose sanctions after a case is closed, as demonstrated in relevant bankruptcy cases. Given that the general bankruptcy case had been ongoing since May 29, 2001, and was converted to Chapter 7 on December 19, 2007, the court found it appropriate to impose sanctions against David E. Hammer and his firm, denying Hammer's motion. Additionally, it ordered the rescheduling of an evidentiary hearing to assess Hammer's good faith in prosecuting his action against the defendants, setting the hearing for January 12, 2010, at 1:30 p.m. in Tampa, Florida. The motion filed by Hammer on September 3, 2009, to vacate the order on the defendants' motion for sanctions and attorney's fees was denied.