Bankruptcy Court Sanctions Lawyers For Mischaracterizing Binding Precedent

IN THE MATTER OF WITT, Bankr. Court, ND Indiana 2012 – Google Scholar.

This is a bankruptcy case. The judge sanctioned the lawyers for one of the parties because they made frivolous arguments and misstated applicable law and precedent. Lawyers frequently cite cases for propositions that do not exist in those cases or use citations and quotes out of context. This case is rare because the court sanctioned the lawyers for mischaracterizing precedent.

The court explained:

“Neither courts nor litigants are free to ignore the holdings of the Supreme Court. U.S. v. Leahy, 438 F.3d 328, 332 (3rd Cir. 2006). Yet, that is exactly what counsel did. Admittedly, they referred to Schwab but then, rather than acknowledging its force, they distorted it beyond recognition. They never once acknowledged the Court’s holding, even though the decision used the words “we hold . . .” which should have dispelled any doubt over its meaning, and that holding was directly contrary to the arguments they advanced. “[W]hen counsel engages in this type of deliberate mischaracterization of precedent, sanctions are warranted.” Teamsters Local No. 579 v B & M Transit, Inc., 882 F. 2d 274, 280 (7th Cir. 1989).


The deliberate mischaracterization of precedent is sanctionable. Teamsters Local No. 579, 882 F.2d at 280; Multi-Media Distributing, 836 F. Supp. at 614 n.7. Words must be read in context; not in isolation, divorced from the context in which they appear. It is the context in which statements are made that gives them their accurate meaning. A particular statement can be misrepresented just as completely by quoting it out of context, even though the quoted statement is accurately reproduced, as by lying about what was said. That is what counsel did here. They accurately quoted a single sentence from an appellate decision, but took it so completely out of the context in which it was made as to make black seem white. That is not only inexcusable, it is sanctionable. See, Multi-Media Distributing, 836 F. Supp. at 613-14 n.7.”

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