A $23 Million Lesson

“We follow orders, son.  We follow orders or people die.  It’s that simple.”

– Colonel Nathan R. Jessep, A Few Good Men

While the consequences are not nearly as dire, debtors in bankruptcy proceedings and litigants in general would be well-advised to heed Colonel Jessep’s admonition.  Such obvious lessons should go without saying.  But occasionally, litigants and attorneys need a reminder.

On January 9, 2017, United States Bankruptcy Judge Joan M. Feeney issued a memorandum and order denying a bankruptcy debtor’s discharge petition because he repeatedly refused to follow the Court’s directives.  The debtor’s disobedience allowed one of his creditors to preserve a $23 million dollar claim against him that was obtained through prior civil litigation.  The Order comes after a six-day trial wherein the creditor introduced evidence and proved by a preponderance of the evidence that debtor had, among other things, “willfully and intentionally refused to obey a lawful order of [the] Court.”

Though a cautionary tale to be sure, litigants need not fret that this case is the start of a trend where by every instance of non-compliance will be cause for an adverse finding.  As the Court explained in great detail (and in accordance with First Circuit case law), a failure to obey caused by inadvertence, mistake, or inability should not give rise to such a penalty.  But when a litigant engages in a prolonged, willful and intentional practice of defying numerous court orders and warnings, he should expect a judge’s gavel to fall on him, and fall hard.

One imagines that the bankruptcy debtor in this case may have finally learned his lesson.  Unfortunately for him, it cost $23 million to do so.

A copy of the Order may be found here:

Memorandum and Order