Brown v. Wilshire Credit Corp.

MEMORANDUM ** Ronald Ellett of the Ellett Law Offices, P.C., appeals from the district court’s order affirming the bankruptcy court’s award of sanctions for violation of Bankr.R. Proc. 9011. We reverse. In a separate opinion contemporaneous with this Memorandum, we reversed the district court’s ruling that it lacked jurisdiction over the bankruptcy court’s rulings on the cross-motions for summary judgment. On remand, the district court will get the first stab at the correctness of those rulings. Regardless, the imposition of sanctions against Ellett and his firm was erroneous. There is no dispute that the trustee’s sale occurred after the bankruptcy stay was in place and that the sale did not get completely unwound until after Ellett, on Brown’s behalf, sued Wilshire for a violation of the automatic stay. In other words, Brown’s lawsuit was filed before all steps had been taken to unwind the sale, and may have succeeded in prodding Wilshire to promptly finish the unwinding the following day. Even if Brown’s suit for damages for willful violation of the stay turns out to be a loser, it was not frivolous. REVERSED. This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.