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In Re: MWL, Inc.

Motion Seeking Sanctions, Hearing Date: 12/6/06

MICHAEL KAPLAN, Bankruptcy Judge

Dear Counsel:

The Court has reviewed the pleadings filed with respect to the motion filed on behalf of Capital Asset Research Corporation, as Servicer for Wachovia Bank, N.A., Custodian for D.H. Associates (hereinafter "Movant"), seeking the imposition of sanctions pursuant to Fed.R.Bankr.P. 901 1(c). For the reasons set forth below, the motion is denied with prejudice.

While the underlying certification filed by Ms. SantaMaria makes no mention of Fed.R.Bankr.P. 9011(c), the accompanying Notice of Motion and Proposed Order cite to this section.

In order to obtain relief under Fed.R.Bankr.P. 9011(c), a motion must allege that the person sought to be sanctioned has signed and submitted a pleading or other paper in violation of Fed.R.Bankr.P. 9011(b). Moreover, before a party files a motion for sanctions, the litigant must give the opposing side 21 days in which to withdraw or correct the allegedly improper document. Movant's pleadings do not demonstrate that these elements have been satisfied.

Even were this Court to treat the within motion as an application for an order of contempt pursuant to Fed.R. of Bankr. P. 9020, relief cannot be granted. "The standard for finding a party in civil contempt is well settled: The moving party has the burden of showing, by clear and convincing evidence that the contemnors violated a specific and definite order of the court. The burden then shifts to contemnors to demonstrate why they were unable to comply." F.T.C. v. Affordable Media, 179 F.3d 1228, 1229 (9th Cir. 1999) (citations omitted). In the matter at bar, the only order identified in Movant's pleadings is the Bench Order of August 8, 2006, requiring the Trustee to remit the settlement proceeds by August 15, 2006. The certification of Russell Passamano, Esq., submitted in opposition, makes it clear that the proceeds were forwarded to Counsel for Movant on or before August 15, 2006, but were returned by the postal service due to an erroneous address. The Court is informed that the proceeds were subsequently sent out to a corrected address. Movant has not met its burden of showing by clear and convincing evidence that there has been a violation by the Trustee of Judge Gambardella's Bench Order.

The Court does express disappointment with the dilatory efforts by the Trustee in consummating the settlement and must assume that the delays in this case represent and isolated instance of nonconformance with the high standards expected of trustees appointed by the Court and Office of the United States Trustee.

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IN RE MWL, INC. (Bankr.D.N.J. 12-6-2006)
(Dec 6, 2006)