The motion for sanctions filed by Donald R. Reynolds and Parris A. Reynolds (Reynolds) duly came before the court for hearing on January 19, 2000. Barton Tiernan appeared on behalf the Reynolds. James Hill appeared on his own behalf. After hearing the comments of counsel, and reviewing the file, IT IS ORDERED:

      The Reynolds' motion for sanctions is granted as follows:

      1. No further chapter 13 petitions shall be presented by James W. Hill to the Clerk of the United States Bankruptcy Court for filing unless accompanied by all required schedules and statements, a chapter 13 plan, and all applicable filing fees. The Clerk shall not accept anything other than a complete chapter 13 filing from Mr. Hill. No further "bare bones" chapter 13 petitions will be allowed by Mr. Hill;

      2. The Reynolds shall recover the sum of $1,000.00 as sanctions against Mr. Hill.

      Creditors Donald and Parris Reynolds have filed a motion for sanctions arising from the late Eldridge C. Sisson's chapter 13 filing. The Reynolds seek to recover $4,349.00 in attorney's fees and costs from James W. Hill, attorney for Mr. Sisson.

      The Reynolds received a judgment for over $500,000.00 against Sisson and his defunct corporation, The Sisco Group, Inc., on April 30, 1999. On July 6, 1999, their motion for a writ of attachment was granted and the Reynolds were allowed to attach Sisson's real and personal property. On July 23, 1999, Sisson's exemptions were "voided" by the state court. On July 28, 1999, the Reynolds took virtually all of Sisson's personal property, including personal and household items, from his home in Anchorage. Sisson was left with clothes, a mattress and a lamp. He filed for chapter 13 relief the following day. An order granting an ex parte "motion for prejudgment writ of attachment" was entered by the state court the same day. This writ directed one M. Cameron Frye to pay any funds owed the debtor into the state court. James Hill demanded a return of Sisson's property from Bart Tiernan, attorney for the Reynolds, on several occasions after filing the petition. On August 8, 1999, Sisson passed away.

      Mr. Hill attempted to continue the bankruptcy proceedings on behalf of Mr. Sisson's estate. He did not appear at several § 341 meetings, however, and schedules were not filed until October 29, 1999. The case was dismissed on November 2, 1999, based on my finding that an estate could not file a chapter 13 plan. The Reynolds then moved for sanctions.

        6 ABR 318        The Reynolds contend that Sisson's chapter 13 petition and related proceedings were presented to harass creditors and cause unnecessary delay in violation of Rule 9011(b)(1).⁽¹⁾ They also contend that the petition was a frivolous pleading under Rule 9011(b)(2). The Ninth Circuit has adopted a sliding scale approach to the application of Rule 9011.⁽²⁾ Before imposing sanctions, "bankruptcy courts must consider both frivolousness and improper purpose on a sliding scale, where the more compelling the showing as to one element, the less decisive need be the showing as to the other."⁽³⁾

      Here, the evidence of a frivolous filing is compelling. Under 11 U.S.C. § 109(e), only an individual with regular income that owes unsecured debts of less than $269,250.00⁽⁴⁾ may be a debtor under chapter 13. The fact that Mr. Hill may have disputed the Reynolds's claim is immaterial.⁽⁵⁾ The Reynolds' claim totaled $528,448.43 as of the day of filing. It was liquidated and not contingent. While up to $50,000.00 of that claim could possibly be considered secured from the attachment of a contract or account receivable, at least $478,448.43 of the Reynolds' claim was unsecured. As it ultimately turned out, Sisson had an additional $235,000.00 of unsecured debt above the Reynolds' claim.⁽⁶⁾

      The evidence of improper purpose is prevalent but not as compelling. I think Mr. Hill honestly believed that the Reynolds had overstepped the bounds of propriety both in obtaining a default judgment and executing upon virtually all of the debtor's worldly goods. The debtor was a depressed alcoholic who may have been incompetent when the judgment and execution occurred. Nevertheless, the filing of a chapter 13 petition by someone who is obviously ineligible cannot be justified. Under the circumstances, the bankruptcy process is being abused and used for an improper purpose. I conclude that Mr. Hill is liable for sanctions under Rule 9011(b).

      Rule 9011(c)(2) provides, in part, as follows:

(2) Nature of Sanction; Limitations. A sanction imposed for violation of this rule shall be limited to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated. Subject to the limitations in subparagraphs (A) and (B), the sanction may consist of, or include, directives of a nonmonetary nature, an order to pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of some or all of the reasonable attorneys' fees and other expenses incurred as a direct result of the violation.

    6 ABR 318  1. All rule references are to the Fed. R. Bankr. P.

    6 ABR 318  2. Marsch v. Marsch (In re Marsch), 36 F.3d 825 (9th Cir. 1994).

    6 ABR 318  3. Id. at 830 (emphasis in original).

    6 ABR 318  4. All amounts are regularly adjusted for inflation under 11 U.S.C. § 104.

    6 ABR 318  5. Sylvester v. Dow Jones & Co, Inc. (In re Sylvester), 19 B.R. 671 (B.A.P. 9th Cir. 1982).

    6 ABR 318  6. See Schedule E, Creditors Holding Unsecured Nonpriority Claims, filed Nov. 1, 1999 [Docket No. 38].

    6 ABR 319  7. Fed. R. Bankr. P. 9011(b)(2).

    6 ABR 320  8. See AK LBR 1007-2, AK LBR 3015-1, Fed. R. Bankr. P. 1007.