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Lisse v. HSBC Bank USA, National Association

United States District Court, W.D. Wisconsin

March 20, 2018

STEVEN ROBERT LISSE, Debtor-Appellant,
v.
HSBC BANK USA, NATIONAL ASSOCIATION FOR THE BENEFIT OF ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-NC3, ASSET BACKED PASS-THROUGH CERTIFICATES, Creditor-Appellee.

          OPINION AND ORDER

          William M. Conley, Judge

         Following my issuance of an order to show cause why Attorney Nora "should not be sanctioned for her frivolous, or at best vexatious, appeal" (Jan. 22, 2018 Order (diet. #49) 1), Nora interposed a number of procedural and substantive objections, including challenges to the court's authority, adequacy of notice, and my claimed bias, as well as requested a formal hearing.[1] Following additional and supplemental notice (Jan. 30, 2018 Order (dkt. #51); Suppl. Not. (dkt. #66)), Chief Judge James Peterson, Chief Bankruptcy Judge Catherine Furay and I held a hearing on February 23, 2018, accepting Attorney Nora's voluminous responsive filings and allowing her and the attorneys she retained to represent her, John William Verant and John Remington Graham (who appeared telephonically), ample opportunity to present their arguments and additional facts orally. After then taking under advisement the question of whether to sanction Nora, including "barring her from appearing in any new matter before the courts of this district" (Jan. 22, 2018 Order (dkt. #49) at 1-2), the court now issues this opinion imposing a $2, 500 fine and a six-month suspension from appearing in any new matter in the District or Bankruptcy Courts of the Western District of Wisconsin, but will hold both sanctions in abeyance absent a further frivolous or vexatious filing.

         Judges Peterson and Furay join in this opinion. Because decisions about admission to practice in this court are generally within the purview of the chief judge, Judge Peterson will issue a separate order effectuating this opinion.

         OPINION

         The order to show cause originated out of Attorney Nora's filings in this appeal on behalf of Steven Lisse and the related appeal of Lisse's wife, from the denial of their respective bankruptcy petitions. As set forth in detail in the additional and supplemental notices, however, this order has much deeper roots given Nora's many frivolous and vexatious filings and numerous requests for inordinately long extensions before all judges of this court over the last eight years.[2] The court first addresses the meritless due process concerns Nora raised, before turning to the substance of her response to the order to show cause and an appropriate sanction.

         I. Due Process Concerns

         In her initial response to the order to show cause, Attorney Nora moved to vacate the order to show cause or to clarify the charges and charging authority. (Mot. Vacate (dkt. #50).) In her further written submissions and again at the formal hearing, Attorney Nora and her counsel raised several due process concerns to the show cause order, including that: (1) this court lacks the legal authority to sanction her; (2) she has not been given sufficient notice of the charges; and (3) as the judge issuing the order to show cause, I cannot fairly participate.

         In this case, I granted defendant's motion to dismiss with prejudice and awarded statutory costs, as well as issued the order to show cause. (Jan. 22, 2018 Order (Dkt. #49).) Despite noting that she "ha[d] more than ample notice of the basis for [the order to show cause], " I twice provided additional detail, initially by order dated January 30 (Order (dkt. #51)), and again with a supplemental notice of the basis of that order on February 15, 2018 (Suppl. Not. (dkt. #66)), which identified roughly a dozen cases since 2010 in which Attorney Nora appeared and this court entered adverse findings regarding her frivolous and vexatious filings, and raised concerns about repeated requests for lengthy extensions that needlessly prolonged the proceedings. (See generally, Suppl. Not. (dkt. #66).) Nevertheless, Attorney Nora and her counsel continued to argue that these statements failed "to specify the charges against Nora as constitutionally required in lawyer discipline cases" because "[t]he standard is that [of] an accused in a criminal case, " such that each count must "be charged in language of ultimate fact . . . including reference to the statute, rule, or regulation claimed to have been violated for each count, " (Mot. Quash (dkt. #59) 2; see also Rejoinder (diet. #67) 1-2.)

         Because an attorney facing suspension or disbarment is plainly not entitled to criminal due process, this argument itself borders on the frivolous. See Matter of Maurice, 73 F.3d 124, 128 (7th Cir. 1995) (Fed. R. App. P. 46(b) "does not require a 'bill of particulars, " but rather "an opportunity to show good cause . . . why the member should not be suspended or disbarred"). "Of course, a district court acting under § 1927 . . . may, in its sound discretion, impose sanctions sua sponte as long as it provides the attorney with notice regarding the sanctionable conduct and an opportunity to be heard." Jolly Grp., Ltd, v. Medline Indus., Inc., 435 F.3d 717, 720 (7th Cir. 2006). See also Fed. R. Civ. P. 11(c)(1) ("If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction . . . ."); N.D. 111. L.R. 8328 (permitting attorneys to be disciplined for misconduct following the issu[ance of] a statement of charges" and the filing of an answer by the attorney, as well as an evidentiary hearing if required).

         Further, the contemplated sanction -- preventing Nora from filing new cases in this court -- is not disbarment, but rather a tool of docket management belonging to the court to prevent frivolous and vexatious filings. See Jolly Grp., 435 F.3d at 720 ("[A] court has discretion to impose § 1927 sanctions when an attorney has acted in an 'objectively unreasonable manner' by engaging in 'serious and studied disregard for the orderly process of justice'; pursued a claim that is 'without a plausible legal or factual basis and lacking in justification'; or 'pursue[d] a path that a reasonably careful attorney would have known, after appropriate inquiry, to be unsound.'" (second alteration in original) (internal citations omitted)); see also Fed. R. App. P. 46(c) ("A court of appeals may discipline an attorney who practices before it for conduct unbecoming a member of the bar or for failure to comply with any court rule. First, however, the court must afford the attorney reasonable notice, an opportunity to show cause to the contrary, and, if requested, a hearing."). The bases for Nora's discipline were set forth in the court's specific rulings as to frivolous legal positions, vexatious maneuvers and unjustified delays in this veiy case, as well as similar rulings by this court in roughly a dozen other cases -- all laid out in a 13-page, supplemental notice of the basis for the order to show cause (Suppl. Not. (diet. #66)). It is hard to fathom that Nora would be entitled to any further notice of the reasons why the court is contemplating restricting Nora's authorization to file cases in this court. Indeed, Nora ultimately appears to acknowledge that Rule 11, 28 U.S.C. § 1927, and the court's own inherent power to manage its docket, all provide ample authority for the court to act (Mot. Quash (dkt. #59) 4).

         Nora contends, in the alternative, that "[i]n all proper lawyer discipline proceedings, the authority which frames the accusation may not also sit in judgment" (id. at 3; see also Rejoinder (dkt. #67) 2). Nora argues that "[t]he Wisconsin Supreme Court has independent prosecutors and proper rules for lawyer discipline proceedings, but this Court does not, hence these proceedings are unauthorized by law." (Mot. Quash (dkt. #59) 4.) Yet again, Nora overstates her due process rights, ignoring that courts across the country, including the Seventh Circuit and the district courts under it, have the authority to discipline the lawyers and parties who come before them, as explained above. Yet Nora stressed that she could not get a fair hearing because the "complainants, witnesses, prosecutors and judges would be the same, contrary to rudimentary principles of due process of law." (Rejoinder (diet. #67) 5-6.) At minimum, Attorney Nora argues that my issuance of an order to show cause "indicates that [I have] . . . already decided ultimate issues of fact and made conclusions of law without notice or opportunity for Attorney Nora to be heard." (Mot. Vacate (diet. #50) ¶ 2.)

         Of course, any order to show cause arising out of conduct before a court would be subject to similar criticism, yet this does not preclude courts from proceeding to manage their dockets and discipline counsel. To further assuage her concern, however, this court determined that Nora's "response to the OTSC [would] be considered by three active judges of this court, with Chief Judge Peterson presiding" at the in-person hearing before a panel comprised of Judges Peterson, Conley and Furay. (Jan. 30, 2018 Order (diet. #51) 3.)[3]

         The court is satisfied that it has authority to act and has provided Nora sufficient due process, so respondent's ...


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