UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
September 16, 1981
IN RE HARTFORD TEXTILE CORPORATION, OXFORD CHEMICALS, INC., AND WELLINGTON PRINT WORKS, INC., DEBTORS , ROSE SHUFFMAN, AS EXECUTRIX OF THE ESTATE OF OSCAR SHUFFMAN, DECEASED, DEFENDANT-APPELLANT ,
HARTFORD TEXTILE CORPORATION, OXFORD CHEMICALS, INC., AND WELLINGTON PRINT WORKS, INC., PLAINTIFFS-APPELLEES .
Appeal from an order entered January 20, 1981 in the Southern District of New York, Abraham D. Sofaer, District Judge, affirming an order entered January 9, 1980 by Roy Babitt, Bankruptcy Judge, which denied appellant's motion to require the bankruptcy court to reconsider its order entered November 14, 1979 denying appellant's oral application for the appointment of a receiver in a Chapter XI proceeding which had been dismissed more than five years prior thereto and in which the bankruptcy court no longer had jurisdiction over the debtors' assets and affairs. Affirmed, with double costs and $5000 damages assessed against appellant's attorney, David K. Shuffman, Esq.
Before: MOORE, TIMBERS and MESKILL, Circuit Judges .
This is the latest in a series of meritless, frivolous appeals, motions and related proceedings*fn1 brought by Attorney David K. Shuffman (hereinafter "Shuffman") purportedly on behalf of his mother, Rose Shuffman, as executrix of the estate of Oscar Shuffman (hereinafter "appellant"), against Hartford Textile Corporation, Oxford Chemicals, Inc., and Wellington Print Works, Inc., three companies formerly in Chapter XI which now are part of The Hartford Corporation, a successor company which itself is the debtor in a pending Chapter XI proceeding.
The specific appeal presently before us is from an order entered January 20, 1981 in the Southern District of New York, Abraham D. Sofaer, District Judge, affirming an order entered January 9, 1980 by Roy Babitt, Bankruptcy Judge, which denied appellant's motion to require the bankruptcy court to reconsider its order entered November 14, 1979 denying appellant's oral application for the appointment of a receiver in a Chapter XI proceeding which had been dismissed more than five years prior thereto and in which the bankruptcy court no longer had jurisdiction over the debtors' assets and affairs.
For the reasons below, we affirm, with double costs and $5000 damages assessed against appellant's attorney, David K. Shuffman, Esq.
Appellant's underlying claims*fn2 stem from a contract which appellant's decedent, Oscar Shuffman, entered into with appellee Hartford Textile Corporation, under the terms of which he was entitled to a finder's fee based on the percentage of deliveries of vinyl to Hartford Textile by Rudd Plastic Fabrics Corporation. Such deliveries were to be made pursuant to a separate contract between Hartford Textile and Rudd. Appellant's multiplicitous claims boil down essentially to two: first, that the Oscar Shuffman contract continued in effect after the filing of the bankruptcy petition and the cessation of deliveries under the Hartford Textile-Rudd contract; and, second, that the determination of appellees' bankruptcy estate should have included purported assets which appellant assert should have been recovered as the result of a series of shareholders' derivative actions brought by certain members of the Magid family. These shareholders' actions were commenced in 1965, eight years prior to the filing of the Chapter XI petition. They had been dormant for eight years prior to the Chapter XI proceeding and they have remained dormant ever since -- a total of sixteen years.
Our Court on December 6, 1978 squarely rejected the first claim of continuing contractual liability. 588 F.2d 872. As for the second claim -- that purported assets should have been included in the bankruptcy estate -- our Court on December 27, 1979 squarely held that the bankruptcy court's order denying reargument on the merits of that claim was not an appealable order. 613 F.2d at 385.
It is in connection with the second essential claim referred to above, as to which our Court more than a year and a half ago ruled as stated above, that the instant appeal has been taken.
The order which is the subject of the instant appeal came about as follows. On November 14, 1979, Shuffman entered the courtroom of the bankruptcy court where a hearing was being held by Judge Babitt on a motion to which neither Shuffman nor his client was a party.*fn3 Without having filed any motion papers and without having given any notice whatsoever to his adversaries (the debtors), Shuffman made an oral application to Judge Babitt for the appointment of a receiver to take control of the assets and affairs of the Hartford Textile Corporation in a Chapter XI proceeding which had been dismissed more than five years prior thereto, on September 5, 1974, at which time the plan of arrangement was confirmed and the debtors were granted a discharge in bankruptcy. Judge Babitt promptly and unequivocally informed Shuffman that "the [Bankruptcy Court] has no appropriate jurisdiction.... This case was confirmed years ago. The property is revested in the debtor." Shuffman's oral application was denied the same day it was made -- on November 14, 1979 -- for lack of jurisdiction. See then applicable Section 367 of the Bankruptcy Act, 11 U.S.C. § 767 (1976) (repealed in part by Bankruptcy Reform Act of 1978; current version at 11 U.S.C. § 1141(a) (Supp. III 1979)).
On November 20, 1979, Shuffman filed a motion in the bankruptcy court for reargument of the denial of his application for the appointment of a receiver, alleging in his supporting affidavit that "[i]t is obvious that the stockholders' derivative action which was deliberately omitted from the Petitions and Schedules is an asset of the debtors, and as such, belongs to creditors." Whether "obvious" or not, our Court has ruled that the order of the bankruptcy court denying reargument on the merits of that claim clearly was not an appealable order. 613 F.2d at 385.
On January 9, 1980, the bankruptcy court denied Shuffman's motion for reargument. Shuffman thereupon appealed to the district court from the orders of the bankruptcy court of November 14, 1979 and January 9, 1980 denying, respectively, his oral application for the appointment of a receiver and his motion for reargument.
From the district court's order of January 20, 1981 dismissing Shuffman's appeal with costs, the instant appeal was taken.
The utter lack of merit to this frivolous appeal, in light of the controlling provisions of Bankruptcy Act and in the context of our prior decisions in this bankruptcy proceeding, normally would require at most a one sentence order affirming the order of the district court with costs. In view of the sanctions which we impose in Section III of this opinion, however, it is appropriate here to make clear the meritless, frivolous nature of this appeal, particularly in view of the stream of frivolous proceedings which have preceded the instant appeal.
The district court held that the bankruptcy court correctly ruled that it did not have jurisdiction to reconsider its denial of Shuffman's oral application for the appointment of a receiver in a Chapter XI proceeding which had been dismissed more than five years earlier.Shuffman v. Hartford Textile Corp ., Docket No. 80 Civ. 4390 (ADS), Arrangement Nos. 73 B 674-676 (S.D.N.Y. January 20, 1981). The correctness of that holding is the only issue before us on this appeal. The chief significance of that issue*fn4 in the context of the instant appeal is what appears to be the inability of Shuffman to accept repeated determinations by the bankruptcy court, the district court and this Court adverse to him on that issue, as we pointed out on an earlier appeal. 613 F.2d at 388.
Neither in his brief nor in oral argument on the instant appeal has Shuffman even attempted to address the only issue before us, referred to above.*fn5 The reason for his avoiding that issue is obvious: we repeatedly have held on prior appeals in this bankruptcy proceeding that the bankruptcy court's order denying reargument clearly is not appealable. 588 F.2d at 876; 613 F.2d at 385. In each instance, we directed Shuffman's attention to the controlling authority in this Circuit. In re Brendan Reilly Associates, Inc ., 372 F.2d 235, 238 (2 Cir. 1967).
Totally ignoring the only issue on this appeal, as well as the controlling authority and the law of the case which is squarely against him, Shuffman has attempted to mask the frivolity of his appeal by claiming that, since the bankruptcy court took what Shuffman characterizes as "post-confirmation jurisdiction" over appellees' bankruptcy estate,*fn6 it necessarily now must take "post-confirmation jurisdiction" over the estate for the purpose of including the purported assets he thinks should have been recovered in the shareholders' derivative actions which have been dormant for sixteen years.
Aside from the unsupported premise for this frivolous claim, it also is in plain contravention of the conclusive effect of Section 367 of the Bankruptcy Act, 11 U.S.C. § 767 (1976) (repealed in part by Bankruptcy Reform Act of 1978; current version at 11 U.S.C. § 1141(a) (Supp. III 1979)), to which Shuffman's attention has been directed repeatedly by the bankruptcy court, the district court and this Court. In short, the bankruptcy court's jurisdiction does not survive five years after confirmation of the plan and dismissal of the case. And an order of the bankruptcy court denying reargument as to its jurisdiction is not appealable.
We affirm in all respects Judge Sofaer's order of January 20, 1981 which affirmed, and dismissed with costs the appeal from, the order of the bankruptcy court of January 9, 1980 which denied reargument of Shuffman's prior oral application for appointment of a receiver.*fn7
Having held that this appeal is frivolous and wholly lacking in merit, we turn finally to the matter of sanctions to be imposed. In light of the authorities set forth below, and under all the circumstances of this case, we order that double costs in this Court and $5,000 damages be awarded to appellees and that they be assessed in the first instance against David K. Shuffman, Esq., individually and as attorney for appellant.*fn8
Our authority to assess damages,*fn9 as well as double costs,*fn10 is clearly provided by statute and the governing rule.
We have not hesitated to exercise that authority in appropriate cases.*fn11 Indeed, in at least two prior Shuffman appeals in this Court in the instant bankruptcy proceeding, we have assessed double costs against appellant, Shuffman's client, after finding the appeals to be frivolous. 648 F.2d at 814; 613 F.2d at 386.*fn12
Moreover, we repeatedly have warned Shuffman that continuation of his repetitive, meritless, frivolous appeals, motions and related proceedings will compel us to impose more severe sanctions. 588 F.2d at 876 n. 3; 613 F.2d at 386; 613 F.2d at 388-91; 648 F.2d at 814.*fn13
Despite the sanctions heretofore imposed and our repeated warnings to Shuffman over a period of nearly three years, his stream of repetitive, meritless and frivolous filings has continued unabated.*fn14 In our December 6, 1978 decision disposing of four appeals, we noted that Shuffman had filed at least twenty-five motions, many meritless and many repetitive. 588 F.2d at 876 n. 3. A year later, in one of our December 27, 1979 decisions disposing of three appeals, we found that Shuffman had "more than doubled" his "output of meritless, frivolous filings" since our December 6, 1978 decision, and we set forth in an appendix some twenty-five such meritless, frivolous filings. 613 F.2d at 386-87. In our most recent Shuffman decision, on May 15, 1981, we observed that that frivolous appeal was "a continuation of the meritless and repetitious filings" noted in our two prior opinions referred to above. 648 F.2d at 814. As of the date of the instant opinion, by actual count, we find that Shuffman during the past three years has inundated this Court with more than a hundred motions, petitions, requests, appeals and other filings, virtually all of which have been utterly frivolous, totally devoid of merit, obviously repetitive and demonstrably vexatious.*fn15
In short, having held that the instant appeal is meritless and frivolous, we conclude, in light of the flood of similar prior meritless and frivolous appeals and related matters pursued by Shuffman in this bankruptcy proceeding, that "the situation here is one of those 'highly unusual' instances which permit the imposition of sanctions under Rule 38 because of 'a clear showing of bad faith'." Fluoro Electric Corporation v. Branford Associates, supra note 9, at 326, quoting West Virginia v. Chas. Pfizer & Co ., 440 F.2d 1079, 1092 (2 Cir.), cert. denied, 404 U.S. 871 (1971). And we further conclude that, since it is Shuffman individually and as the attorney for appellant who is responsible for the unreasonable prolongation of this litigation by his pursuit of meritless and frivolous appeals, he accordingly is the proper person against whom to assess double costs and damages as ordered below. Browning Debenture Holders' Committee v. Dasa Corp., supra, 605 F.2d at 40-41; Acevedo v. Immigration & Naturalization Service, supra, 538 F.2d at 921.*fn16
Our decision on this appeal is a stern warning that the United States Courts are not powerless to protect the public, including litigants who appear before the Courts, from the depredations of those such as Shuffman who hold themselves out as attorneys but who abuse the process of the Courts to harass and annoy others with meritless, frivolous, vexatious or repetitive appeals and other proceedings.
We order that the mandate issue forthwith; that the judgment of this Court include the provisions for double costs and damages as ordered above; that execution on the judgment of this Court for damages issue forthwith; and that execution on the judgment of this Court for costs issue within ten days of the date of the taxation of costs according to law.
Affirmed, with double costs and $5000 damages against appellant's attorney in this Court, David K. Shuffman, Esq.