E.D.N.C.: Spoor v. Barth- Denial of Sanctions and Vexatious Multiplication of Litigation

Summary: Mr. Barth commenced an adversary proceeding seeking a declaratory judgment that various state court actions by Mr. Spoor could have been brought by the bankruptcy trustee, who had previously signed a release of such actions, and that Mr. Spoor should be required to dismiss those actions. The bankruptcy court instead dismissed Mr. Barth’s adversary proceeding on the grounds that such relief was prohibited by the Anti-Injunction Act, 28 U.S.C. § 2283. The bankruptcy court declined, however, to award the sanctions sought by Mr. Spoor pursuant to North Carolina Rule of Civil Procedure 11, 28 U.S.C. § 1927, 11 U.S.C. § 105, and Bankruptcy Rule 9011, against Mr. Barth, holding that none of his filings were frivolous, vexatious or in bad faith. Finding that it was not “clearly erroneous” for the bankruptcy court to have held that Mr. Barth’s arguments were, while not persuasive, also not frivolous, the district court affirmed. Commentary: This case is somewhat unusual as it is an affirmation by the Eastern District of North Carolina of a decision by a Middle District bankruptcy judge, sitting by designation in an Eastern District bankruptcy case. For a copy of the opinion, please see: Spoor v. Barth- Denial of Sanctions and Vexatious Multiplication of Litigation