Virginia Hospital Center-Arlington Health System v. Akl

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
ZIAD AKL,
Debtor.
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VIRGINIA HOSPITAL CENTER-
ARLINGTON HEALTH SYSTEM,
Plaintiff,
v.
ZIAD AKL,
Defendant.
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Case No. 07-00256
(Chapter 7)
Adversary Proceeding No.
07-10026
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION RE THE DEFENDANT’S MOTION FOR ORDER TO
SHOW CAUSE WHY VIRGINIA HOSPITAL CENTER AND ITS COUNSEL SHOULD
NOT BE HELD IN CRIMINAL CONTEMPT OF COURT FOR FRAUD UPON THE
COURT AND WHY MONETARY SANCTIONS SHOULD NOT BE IMPOSED ON THEM
This addresses the motion (the “Motion”) filed by the
defendant, Ziad Akl, entitled:
Defendant’s Motion for Order to Show Cause Why Virginia
Hospital Center and its Counsel Should Not Be Held in
Criminal Contempt of Court for Fraud upon the Court and
Why Monetary Sanctions Should Not Be Imposed on Them
The Memorandum Decision below is hereby signed.
Dated: September 3, 2008.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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1 	Although the text the clerk entered that is Docket Entry
No. 60 suggests that the Motion was assigned Docket Entry No. 60,
the filing that was docketed as Docket Entry No. 60 was a motion
(docketed also as Docket Entry No. 59) to delay acting on another
motion pending the filing and adjudication of the Motion (Docket
Entry No. 61) addressed by this decision.
2 	Because I do not believe that there are reasonable
grounds for believing that there has been a violation of any laws
of the United States or that an investigation should be had in
connection with Akl’s assertions, this is not an appropriate case
for this court to make a report to the United States Attorney
under 18 U.S.C. § 3057. 	Nor is this an appropriate case for this
court to certify to the district court that a criminal contempt
may have arisen that the district court may wish to pursue.
2
(Docket Entry No. 61). 1 	The court will deny the Motion for the
following reasons.
I
The Motion requests that the court hold certain individuals
in criminal contempt for certain allegedly false representations
they made to the court. 	The defendant has no authority to
prosecute a criminal contempt matter. 	See Young v. United States
ex rel. Vuitton et Fils S.A., 481 U.S. 787 (1987); Griffith v.
Oles (In re Hipp, Inc.), 895 F.2d 1503, 1506-1509 (5th Cir.
1990). 	He does not allege that he has requested that the United
States Attorney prosecute the matter. 	Unless such a request were
made and declined, the court would have no authority to appoint
private counsel to prosecute the alleged criminal contempt. 	Id.
Even if such a request had been made and declined, the
allegations the defendant presents fall far short of the conduct
that would warrant a court’s appointing special counsel. 2
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3
II
In any event, this court does not have the authority to hear
a criminal contempt matter relating to past conduct not presently
occurring in a hearing (as opposed to criminally contemptuous
conduct occurring in an ongoing hearing that the court must be
able to address in order to maintain decorum). 	See In re Hipp,
Inc., 895 F.2d at 1509-1521; Placid Refining Co. v. Terrebonne
Fuel & Lube, Inc. (In re Terrebonne Fuel & Lube, Inc.), 108 F.3d
609, 613 n.3 (5th Cir. 1997); Knupfer v. Lindblade (In re Dyer),
322 F.3d 1178, 1197 (9th Cir. 2003); Price v. Lehtinen (In re
Lehtinen), 332 B.R. 404, 412 (B.A.P. 9th Cir. 2005). 	But see
Brown v. Ramsay (In re Ragar), 3 F.3d 1174, 1177-79 (8th Cir.
1993); Graham v. United States (In re Graham), 981 F.2d 1135,
1142 (10th Cir. 1992) (dictum). 	Here, the bankruptcy case has
been concluded except for this adversary proceeding which dealt
only with the issue of dischargeability of a particular debt and
not the administration of the bankruptcy estate by the chapter 7
trustee. 	There is no order being enforced via civil contempt
sanctions in order to complete administration of the adversary
proceeding. 	Nor is the court called upon to punish for
disruptive conduct occurring in an ongoing hearing. 	Only a
criminal sanction for past conduct is at stake. 	Criminal
offenses (such as perjury) that arise in the bankruptcy court are
tried in the district court, not the bankruptcy court, unless
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4
Congress has changed that long-standing practice.
As In re Hipp, Inc., 895 F.2d at 1510, discusses, a criminal
contempt proceeding is between the public and the party
committing the offense, and is not part of the original case.
The court whose authority is vindicated via punishment for
criminal contempt is the district court of which the bankruptcy
court is only “a unit” authorized under 28 U.S.C. § 151 to
exercise only the authority conferred under chapter 6 (Bankruptcy
Judges) of title 28, U.S. Code (28 U.S.C. §§ 151 through 159).
Bankruptcy judges are authorized to hear only two types of
proceedings.
Under 28 U.S.C. § 157(b)(1), the bankruptcy court may hear
and determine all “core proceedings” arising in a case under
title 11 that are referred to it by the district court under 28
U.S.C. § 157(a), but a criminal contempt proceeding, as a
proceeding independent of the bankruptcy case itself, cannot be
viewed as going to the core of the bankruptcy case. 	In re Hipp,
Inc., 895 F.2d at 1517-18. 	Even In re Ragar suggested that
treating criminal contempt proceedings of the character involved
here as core proceedings would be inappropriate.
Under 28 U.S.C. § 157(c)(1), a bankruptcy court may
additionally hear a non-core proceeding “that is otherwise
related to” the bankruptcy case. 	A criminal contempt proceeding,
however, is not tied to the bankruptcy case but is an independent
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3 	Although § 157(b) speaks of referring “proceedings” to
the bankruptcy court that arise in or are related to a bankruptcy
case without limiting such proceedings as in the bankruptcy
jurisdiction statute, 28 U.S.C. § 1334(b), to “civil
proceedings,” that might be explained by the necessity of the
bankruptcy judge to be able to impose criminal contempt sanctions
to maintain decorum in the midst of an ongoing hearing. 	Often
civil contempt sanctions (incarcerating a party or witness until
she forswears disobedience with the court’s order) or other civil
sanctions may be just as effective a tool, and that may explain
why I have not readily found any decisions addressing a
bankruptcy judge’s having imposed criminal contempt sanctions to
maintain decorum in an ongoing hearing.
5
criminal proceeding that is not part of the bankruptcy case and
that has no impact on the administration of the bankruptcy case.
Because criminal contempt proceedings are designed to invoke
criminal sanctions to vindicate the public’s interest (not the
original case’s litigants’ interest) in punishing a party’s
willful violation of a court order, and are not part of the civil
proceeding, a criminal contempt motion of the character pursued
here is not tied to the role that bankruptcy judges play of
assuring that a bankruptcy case is fully administered. 3
A criminal contempt adjudication of the character sought
here is for the same reasons not necessary or appropriate to
carry out the provisions of the Bankruptcy Code under 11 U.S.C. §
105(a). 	It is no different than a criminal proceeding to punish
for perjury committed in the bankruptcy court. 	Even if § 105(a)
were interpreted as including criminal contempt proceedings of
the character pursued here as necessary or appropriate for the
district court to carry out the provisions of the Bankruptcy
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Code, 11 U.S.C. § 105(c) makes clear that the authority of a
bankruptcy judge to exercise the authority granted by § 105(a) is
confined to the power granted to a bankruptcy judge under 28
U.S.C. § 157, and, as demonstrated above, § 157 cannot be viewed
as conferring on a bankruptcy judge the power to hear a criminal
contempt proceeding of the character pursued here.
Punishing criminal contempt is tied to the power, flowing
from the Constitution and express statutory authority, that the
Article III judiciary traditionally exercises to vindicate the
authority of the court. 	In re Hipp, Inc., 895 F.2d at 1512-13.
Because Congress has not given a clear indication that it
intended to let bankruptcy judges punish criminal contempt (other
than, possibly, for misconduct occurring presently in the
courtroom that must be addressed to maintain decorum in the
ongoing hearing), I agree with the reasoning of In re Hipp, Inc.
and conclude that the District Court Local Rule referring certain
bankruptcy matters to this court does not include criminal
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4 	Although bankruptcy courts have jurisdiction to issue
orders imposing punitive sanctions under Rule 9011(c)(2) of the
Federal Rules of Bankruptcy Procedure, those sanctions are
designed to encourage compliance with the pleading rules of Rule
9011(b) (being “limited to what is sufficient to deter repetition
of such conduct or comparable conduct by others similarly
situated”), are of a civil character, and are a part of the civil
proceeding within which the sanctions are awarded. 	That serves
to distinguish proceedings to recover such sanctions from
criminal contempt proceedings addressing past conduct not
occurring in an ongoing hearing. 	Similarly, civil contempt
proceedings in a bankruptcy case arise in a civil proceeding and
are designed to coerce compliance with an order in that
proceeding or to compensate a party in that proceeding for the
damage arising from violation of the order.
5 	Akl does not seek sanctions under Rule 9011 of the
Federal Rules of Bankruptcy Procedure. 	The Motion was not one
served as required by Rule 9011 at least 21 days prior to the
plaintiff’s moving for dismissal of its complaint. 	Akl cannot
invoke Rule 9011 to recover monetary sanctions with respect to
the complaint. 	See Rule 9011(c)(1)(A) (a party’s motion under
Rule 9011(c)(1)(A) may not be filed if the opposing party
withdraws the offending paper within 21 days of service of the
motion); Rule 9011(c)(2)(B) (court may not impose monetary
sanctions against a party’s attorneys on its own initiative
unless the court issues its order to show cause before a
voluntary dismissal of the claims made by the party whose
attorneys are to be sanctioned).
7	O:\TEEL\Alex\Virginia Hospital Center v. Akl\VHC v Akl - Decsn re Criminal Contempt v3.wpd
contempt proceedings of the character pursued by Akl’s Motion. 4
III
Because the motion sets forth no basis other than criminal
contempt for requesting that the court impose monetary sanctions,
the Motion must be denied. 5 	An order follows.
[Signed and dated above.]
Copies to: All counsel of record; Office of United States
Trustee.
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