Preston E. Byrd (“Byrd”), pro se, appeals an order of the bankruptcy court granting a motion for sanctions against him pursuant to Federal Rule of Bankruptcy Procedure 9011. The order required Byrd to pay Arvest Bank’s attorney fees and expenses in the amount of $42,299.08.
The issue presented by this appeal is whether the bankruptcy court abused its discretion in ordering that Byrd pay Arvest Bank’s attorney fees and expenses as a sanction for filing a chapter 11 bankruptcy petition without authority and in bad faith in violation of Federal Rule of Bankruptcy Procedure 9011.
Sanctions were imposed against Byrd for causing the chapter 11 petition to be filed without authority to do so, and doing so in bad faith. Byrd was ordered to pay Arvest Bank its attorney fees and expenses incurred through December 28, 2009, in the amount of $42,299.08.4 In determining whether to impose sanctions against Byrd, the bankruptcy court analyzed whether he had a reasonable basis to believe that he had authority to cause the chapter 11 petition to be filed on Debtor’s behalf.
The court determined that Byrd did not, because he is a sophisticated businessman who was fully aware that, at a minimum, there was a dispute as to whether Horizon continued to serve as Debtor’s general partner, and that as Horizon’s chief manager and signatory to the Partnership Agreement, Byrd was charged with the knowledge that the Partnership Agreement required the consent of the limited partner to file a petition for bankruptcy. Moreover, the court noted that for the purposes of this case, the court had determined in its earlier order that Horizon was removed as general partner before the filing, and the filing was not authorized.
A bankruptcy court’s imposition of sanctions is reviewed for an abuse of discretion. An abuse of discretion is established when the reviewing court is left with a “definite and firm conviction that the trial court committed a clear error of judgment.” An abuse of discretion occurs only when the trial court relies upon clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous legal standard. The question is not how the reviewing court would have ruled, but rather whether a reasonable person could agree with the bankruptcy court’s decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion.
Affirmed.