In re: Jones

The Hargers were Jones’ neighbors. Police reports indicate that there were issues between the neighbors for several years. Grad worked for CarMeds, ostensibly owned by Jones’ mother and run by Jones, occasionally visiting Jones’ home. Grad claimed to have been assaulted after such a meeting. At the police station, Grad identified Harger from a photo line-up. Ultimately, charges were dropped. The Hargers sued Grad and Jones, asserting conspiracy to have Harger falsely arrested. Meanwhile, Jones filed a Chapter 7 bankruptcy petition. Hoover, the Hargers’ attorney, moved to modify the automatic stay and filed an adversary complaint, alleging that Jones's debt was non-dischargeable and seeking denial of discharge based on the assertion that Jones lied about the ownership of CarMeds. The bankruptcy court later dismissed the adversary proceeding on the Hargers’ motion, and set a hearing sua sponte, directing the Hargers and Hoover to show that they had reasonable grounds for filing. The court found that Hoover violated Rule 9011 by filing without specific evidence and made intentional misrepresentations in his filings; directed him to pay $26,000 in attorneys’ fees; revoked Hoover’s electronic bankruptcy filing authority; and referred the matter for possible prosecution. The Sixth Circuit Bankruptcy Panel reversed, holding that the bankruptcy court relied on clearly erroneous factual findings ;erred as a matter of law in awarding fees on a sua sponte basis; and abused its discretion in imposing any sanctions. View "In re: Jones" on Justia Law