Court Denies Creditor’s Rule 9011 Motion for Sanctions where it had already Sanctioned the Debtor with a Denial of Discharge

Court Denies Creditor’s Rule 9011 Motion for Sanctions where it had already Sanctioned the Debtor with a Denial of Discharge

This case has a long and litigious history which culminated in this Court’s Order of July 21, 2017, denying the Debtor a discharge under 11 U.S.C. § 727. Throughout the case,  the Plaintiff in the adversary proceeding and the Movant in the main case filed four motions for sanctions against the Debtor (“Sanctions Motions”). The Court reserved consideration of the Sanctions Motions until the conclusion of the trial on the Debtor’s entitlement to a discharge since the allegations in the Sanctions Motions were much the same as those in the discharge complaint.

The Plaintiff makes four primary contentions with respect to the Debtor: (i) she omitted to schedule the Honda Odyssey in her initial Schedules, (ii) she testified falsely regarding the ownership of the Honda Odyssey at the September 2015 evidentiary hearing, (iii) the Debtor’s pursuit of this case was to prolong, confuse and frustrate creditor from collecting his debt, and (iv) the Debtor abused the discovery process. The Court notes that the earliest Sanction Motion against the Debtor was filed August 23, 2016, which was after the Debtor amended her Schedule B on February 26, 2016, to reflect correctly her ownership interest in the Honda Odyssey. The purpose of the safe harbor provision is to provide the challenged party with the opportunity to correct any mistakes. Since the Debtor corrected the erroneous information regarding ownership of the car, a Rule 9011 sanction is not appropriate with respect to that statement.

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