Ralbert Rallington Brooks-Hamilton

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	No. 03-44829 TT
Chapter 7
RALBERT RALLINGTON
BROOKS-HAMILTON,
Debtor.
___________________________/
MEMORANDUM OF DECISION RE SANCTIONS ON REMAND
On 	September 	1, 	2004, 	an 	order 	was 	entered 	pursuant 	to 	the
Court’s order to show cause suspending David A. Smyth (“Smyth”) from
practicing 	law 	for 	a 	period 	of 	six 	months 	as 	a 	sanction 	for 	his
conduct in the above-captioned bankruptcy case. 	The order was stayed
pending appeal. 	The order was affirmed by the Bankruptcy Appellate
Panel. 	On 	further 	appeal, 	the 	Ninth 	Circuit 	Court 	of 	Appeals
remanded 	the 	matter 	to 	this 	Court 	for 	reconsideration 	of 	the
appropriateness 	of 	the 	sanction 	given 	its 	partial 	reversal 	in 	a
related 	appeal. 	For 	the 	reasons 	stated 	below, 	the 	Court 	concludes
that 	the 	prior 	sanction 	imposed 	is 	still 	the 	most 	appropriate
sanction for Smyth’s misconduct.
Signed: August 29, 2008
________________________________________
LESLIE TCHAIKOVSKY
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
September 02, 2008
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 03-44829 Doc# 226 Filed: 08/29/08 Entered: 09/02/08 17:16:16 Page 1 of
5

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
2
From 	1996 	to 	1998, 	the 	above-captioned 	debtor 	(the 	“Debtor”)
borrowed a total of $500,000 from the City of Oakland (the “City”).
As 	security 	for 	his 	repayment 	obligation, 	the 	Debtor 	gave 	the 	City
liens 	on 	his 	residence, 	a 	warehouse, 	and 	certain 	business 	personal
property. 	He 	defaulted 	in 	his 	payment 	obligations 	almost
immediately. 	In January 2001, the City filed a complaint against the
Debtor 	in 	state 	court 	and 	commenced 	nonjudicial 	foreclosure
proceedings 	against 	its 	real 	property 	collateral. 	The 	Debtor 	was
able 	to 	delay 	the 	foreclosure 	by 	filing 	a 	series 	of 	legal 	actions,
including 	a 	complaint 	filed 	in 	federal 	district 	court, 	a 	cross-
complaint filed in the state court action commenced by the City, and
a prior chapter 13 case. 	Smyth began representing the Debtor when
the state court cross-complaint was filed.
The 	above-captioned 	chapter 	13 	case 	was 	filed 	in 	August 	2003.
In 	this 	case, 	Smyth 	filed 	a 	Schedule 	of 	Assets 	and 	Liabilities 	on
behalf 	of 	the 	Debtor, 	listing 	the 	City 	as 	a 	secured 	creditor 	and
scheduling its claim as undisputed. 	He filed a plan providing that
the 	City’s 	claim 	would 	be 	paid 	by 	April 	1, 	2004 	through 	a 	sale 	or
refinance of the Debtor’s real property. 	The City did not object to
the plan, and it was confirmed in December 2003.
In March 2004, Smyth filed an objection to the City’s claim. 	He
contended 	that 	the 	City 	had 	lost 	its 	security 	interest 	in 	the
Debtor’s real property when the plan was confirmed because the plan
did 	not 	expressly 	refer 	to 	the 	claim 	as 	a 	secured 	claim. 	He 	also
contended that the City had no underlying unsecured claim because it
had 	filed 	a 	proof 	of 	claim 	in 	the 	bankruptcy 	case 	asserting 	a
Case: 03-44829 Doc# 226 Filed: 08/29/08 Entered: 09/02/08 17:16:16 Page 2 of
5

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
3
security 	interest. 	Based 	on 	these 	objections 	to 	the 	City’s 	claim,
the 	Court 	issued 	an 	order 	to 	show 	cause 	Smyth 	should 	not 	be
sanctioned 	pursuant 	to 	Rule 	9011(b) 	of 	the 	Federal 	Rules 	of
Bankruptcy 	Procedure 	for 	asserting 	frivolous 	claims 	and 	asserting
claims for an improper purpose.
After hearing and after considering the arguments presented by
Smyth, on September 1, 2004, the Court issued an order finding that
Smyth 	had 	failed 	to 	show 	cause 	with 	respect 	to 	either 	ground 	and
suspending 	Smyth 	from 	practice 	before 	the 	bankruptcy 	courts 	of 	the
Northern 	District 	of 	California 	for 	six 	months. 	Based 	on 	Smyth’s
history 	of 	prior 	misconduct, 	resulting 	in 	lesser 	disciplinary
sanctions, the Court concluded that the six month suspension was the
least 	severe 	sanction 	that 	could 	reasonably 	be 	expected 	to 	deter
future 	misconduct. 	At 	the 	same 	time, 	pursuant 	to 	the 	City’s 	Rule
9011(b) motion in a related adversary proceeding, the Court imposed
a monetary sanction against Smyth in the amount of $10,671 based on
Smyth’s 	assertion 	of 	frivolous 	claims 	in 	that 	proceeding. 	Both
orders 	were 	affirmed 	by 	the 	Bankruptcy 	Appellate 	Panel 	and 	were
appealed to the Ninth Circuit Court of Appeals.
The 	Ninth 	Circuit 	reversed 	the 	Court’s 	order 	in 	part 	in 	the
adversary 	proceeding, 	concluding 	that 	two 	of 	the 	three 	claims 	at
issue were not frivolous. 	It remanded for a reconsideration of the
monetary sanction based on this ruling. 	The Ninth Circuit affirmed
the 	Court’s 	order 	in 	the 	main 	case, 	as 	it 	related 	to 	Smyth’s
frivolous objection to the City’s claim. 	Nevertheless, because the
Court had considered the monetary sanction imposed against Smyth in
Case: 03-44829 Doc# 226 Filed: 08/29/08 Entered: 09/02/08 17:16:16 Page 3 of
5

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
4
the adversary proceeding in determining the sanction to be imposed in
the 	main 	case, 	the 	Ninth 	Circuit 	also 	remanded 	the 	main 	case 	order
for reconsideration.
In a separate memorandum, filed in Adversary Proceeding No. 03-
4837, the Court has now reduced the monetary sanction to be imposed
on Smyth for his assertion of a single frivolous claim from $10,671
to $2,134.20. 	Having then reconsidered the issues presented in this
case, 	taking 	into 	account 	the 	reduced 	monetary 	sanction 	in 	the
adversary proceeding, the Court concludes that a six month suspension
is 	still 	the 	most 	appropriate 	sanction. 	The 	reduction 	of 	the
monetary 	award 	in 	the 	adversary 	proceeding 	does 	not 	call 	for 	a
lessening of the nonmonetary sanction to be awarded in the main case.
If 	anything, 	it 	calls 	for 	a 	greater 	one. 	However, 	the 	Court 	is
persuaded that the six month suspension is sufficiently severe to be
likely to serve some deterrence purpose.
CONCLUSION
For the reasons stated above, the Court reaffirms its conclusion
that, based on his frivolous objection to the City’s claim, which the
Court concludes was also asserted for an improper purpose, Smyth will
be 	suspended 	from 	practice 	before 	the 	bankruptcy 	courts 	of 	the
Northern District of California for a period of six months. 	The six
month period will run from the effective date of the order pursuant
to this decision. 	The six month bar will exclude those cases already
filed in which Smyth has already appeared as attorney of record.
END OF DOCUMENT
Case: 03-44829 Doc# 226 Filed: 08/29/08 Entered: 09/02/08 17:16:16 Page 4 of
5

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
5
COURT SERVICE LIST
David Ashley Smyth
Smyth Law Offices
1990 N California Blvd. #830
Walnut Creek, CA 94596
Chris Kuhner
Kornfield, Paul & Nyberg
1999 Harrison St., #2675
Oakland, CA 94612
Case: 03-44829 Doc# 226 Filed: 08/29/08 Entered: 09/02/08 17:16:16 Page 5 of
5