The Ninth Circuit’s unpublished opinion vacated a ruling made in the United States Bankruptcy Court of Nevada by the Honorable Bruce A. Markell that imposed sanctions on a law firm representing a single asset, single creditor debtor in a Chapter 11 proceeding. The judge approved a sanctions motion on the debtor because they filed their bankruptcy petition in bad faith in an attempt to delay the repossession of a Porsche 911. Markell also ordered sanctions on the debtor’s subsequently retained attorneys for furthering the proceedings. The Ninth Circuit reversed the attorney’s sanctions.
Notably, Gov. Brian Sandoval, then a federal judge, affirmed the original sanctions opinion when it was first appealed to the Federal District Court in Nevada. However, the Ninth Circuit found the sanctions to be “unduly harsh” and disagreed with Markell’s legal conclusions.
Serrano said he reviewed the facts in the case and found he agreed with Markell’s original opinion rather than the Ninth Circuit’s.
“It was a plainly wrong decision, but not surprising if you consider that the sanctioned attorneys were the only party to present their case, and given the court’s unfamiliarity with bankruptcy policy and code,” Serrano said, referring to the Ninth Circuit’s opinion.
Serrano consulted with Boyd School of Law Professor Nancy Rapoport, who originally alerted him to the decision and agreed that it raised important procedural and ethical issues. Rapoport suggested this situation would make an interesting article submission to the American Bankruptcy Institute (ABI) Journal. He submitted the article, and it appeared in the September 2011 edition. The article’s publication coincided with the ABI’s conference hosted at the Four Seasons Hotel in Las Vegas, and Serrano said he received a great deal of positive feedback from those in attendance, including from Markell.
Serrano first became interested in bankruptcy during his first year, when he taught basic bankruptcy concepts as part of the school’s community service program. He ultimately won the bankruptcy community service award that spring.
“I believe an understanding of basic bankruptcy concepts is important for every attorney doing any kind of business or family practice, because it is an option available to most individuals and businesses,” he said. “What happens if your client, their partners, or third parties consider filing bankruptcy? Especially in this economy, it is super important to understand the consequences of bankruptcy.”
Later this academic year, Serrano will intern for the U.S. Bankruptcy Court, District of Nevada and compete with a team of Boyd students in the Duberstein Bankruptcy Moot Court Competition in Brooklyn, New York.