In re Kinney
United States Bankruptcy Court for the Central District of California
51 B.R. 840 (1985)
Julia Coleman (defendant) represented several members of the Kinney family before the bankruptcy court. One member of the Kinney family (primary debtor) owned a piece of real property in Compton that served as security for a mortgage held by Imperial Bank. Imperial Bank sought to foreclose on the property. To block the foreclosure, the primary debtor issued at least eight mortgages to other members of the Kinney family, and those members then filed for bankruptcy. The family members’ only intentions in filing for bankruptcy were to trigger bankruptcy law’s automatic stay to stymie Imperial Bank’s foreclosure. Coleman represented the Kinneys and believed, wrongfully, that such tactics were lawful. The bankruptcy court sought to sanction Coleman for pressing improper litigation. Coleman argued that her good-faith belief that she had complied with the law made sanctioning her improper.
Rule of Law
Holding and Reasoning (Mund, J.)
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