Scott Chapman v. U.S. Trustee

Appellants Scott E. Chapman, Esq., Kurt K. Harris, Esq., Michael R. Merritt, Esq., and the law firm Harris Merritt Chapman, Ltd. (collectively, “Appellants”) appeal from the judgment of the district court entered on February 28, 2008, affirming the judgment of the bankruptcy court (Bruce Markell, B.J.) that sua sponte imposed extensive sanctions against Appellants stemming from work Chapman performed in an underlying Chapter 11 bankruptcy case. We have jurisdiction pursuant to 28 U.S.C. § 158 (d). We REVERSE the district court’s judgment regarding the sanctions and VACATE the bankruptcy court’s order.

FACTUAL AND PROCEDURAL BACKGROUND

Chapter 11 Bankruptcy Filing and Related Proceedings

On or about July 30, 2004, debtor Aston-Nevada Limited Partnership (“Aston-Nevada”), through its owner, Kerry Rogers, filed for Chapter 11 bankruptcy. Phillip LeVillier, a business associate of Rogers and an unlicensed attorney or paralegal, prepared and signed the bank ruptcy petition. Silver State Bank, the sole creditor of the bankruptcy estate, filed a motion for relief from the bankruptcy stay on August 13, 2004. The bankruptcy court set a hearing date on the motion for August 24, 2004. As…