In re Joshua Lemarr Treadwell

Background

Trinity Financial Services, LLC appealed a bankruptcy court decision that denied relief under Federal Rule of Civil Procedure 60(b) and imposed discovery sanctions, including $13,265 in attorneys’ fees. The district court had affirmed the bankruptcy court’s decision in all respects. Joshua Lemarr Treadwell then sought sanctions for what he described as a frivolous appeal and separately sought attorneys’ fees for defending the bankruptcy court’s attorneys’ fee award on appeal.

Frivolous-appeal sanctions

Treadwell requested sanctions under Federal Rule of Bankruptcy Procedure 8020. The rule allows a court to award damages and costs when an appeal is frivolous. The court explained that an appeal is frivolous when its result is obvious or its arguments are wholly without merit.

The court denied Treadwell’s motion for sanctions. It concluded that Trinity’s arguments about whether its allegations of neglect required consideration of the Supreme Court’s four-factor test for excusable neglect were ultimately unsuccessful but were not wholly without merit. The result was also not obvious, and the arguments were not clearly foreclosed by precedent.

Attorneys’ fees

The court ruled that Treadwell was entitled to recover reasonable attorneys’ fees incurred defending the discovery-sanctions order on appeal. Treadwell’s counsel identified $1,960 in fees relating solely to the discovery-sanctions issue, $5,040 relating solely to the Rule 60(b) issue, and $26,560 relating to work concerning both issues.

The court found sufficient support for the $1,960 in fees tied solely to the discovery-sanctions order. It found insufficient evidentiary support for awarding the full $26,560 in fees for work concerning both issues because the records did not adequately show that the work could not be divided between the two appeals. The court noted that the Rule 60(b) issue was the main focus of the briefing.

Because the other work showed that 28% was attributable to the discovery-sanctions appeal, the court assigned 28% of the $26,560 shared-work amount—$7,436.80—to that appeal. Together with the $1,960 in fees tied solely to the sanctions issue, the court ordered Trinity to pay Treadwell $9,396.80 in attorneys’ fees.

Disposition

Judge P. Casey Pitts denied Treadwell’s motion for sanctions for a frivolous appeal and ordered Trinity to pay Treadwell $9,396.80 in attorneys’ fees incurred defending the bankruptcy court’s attorneys’ fee award on appeal.