In re: Clark & Washington, P.C. - U.S. Bankruptcy Court

JOHN P. GUSTAFSON, Bankruptcy Appellate Panel Judge. This appeal arises from the suspension of Clark & Washington, P.C. (“Clark & Washington” or “Appellant”) from practice before the Bankruptcy Court for the Western District of Tennessee (“TNWB”). Appellant Clark & Washington asks the Panel to determine whether the Bankruptcy Court’s actions constitute an abuse of discretion. Because the Bankruptcy Court did not adequately support the imposition of sanctions, the Panel finds that the suspension was an abuse of discretion. Accordingly, the Panel finds it unnecessary to resolve the appeal’s request for rational basis review. For the reasons stated below, the Bankruptcy Court’s judgment is REVERSED AND REMANDED for further factual findings.

ISSUES ON APPEAL

1. Did the Bankruptcy Court abuse its discretion by sua sponte suspending Appellant and its

staff attorneys from representing debtors in bankruptcy cases filed in the Western District

of Tennessee solely because Appellant lacks a physical office in that district and its staff

attorneys are not physically present there? 2. Did the Bankruptcy Court violate Appellant’s right to due process when it determined

that it is permissible for creditors to be represented by out-of-district law firms, but

consumer debtors may not be represented by similarly situated debtors’ firms?¹1. Appellant’s initial Statement of Issues on Appeal presented two additional questions that were not discussed in the brief. Because Appellant did not develop any argument related to these issues, they are considered waived. Margolin v. Nat’l Ass’n of Immigr. Judges, 608 U.S. 339, 342, 146 S. Ct. 1285, 1286 (2026) (courts “rely on the parties to frame the issues for decision and decide only the questions presented[.]”); Nyamusevya v. CitiMortgage, Inc. (In re Nyamusevya), No. 19-8027, 2021 WL 193965, at *7 (B.A.P. 6th Cir. Jan. 20, 2021) (“Issues not properly developed are waived on appeal.”).

JURISDICTION

The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States District Court for the Western District of Tennessee (“WDTN”) has authorized appeals to the Panel, and no party has timely elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A bankruptcy court’s final order may be appealed as of right pursuant to 28 U.S.C. § 158(a)(1). An order imposing sanctions is a final order for purposes of appeal. Dean v. Lane (In re Lane), 604 B.R. 23, 27 (B.A.P. 6th Cir. 2019).

STANDARD OF REVIEW

“A bankruptcy court’s imposition of sanctions is reviewed for an abuse of discretion.” Byrd v. Arvest Bank (In re Lamar Crossing Apartments, L.P.), 464 B.R. 61 (Table), 2011 WL 6155714 at *1 (B.A.P. 6th Cir. Sept. 20, 2011). A bankruptcy court’s use of its equitable powers is also reviewed for an abuse of discretion. Grant, Konvalinka & Harrison, P.C. v. Still (In re McKenzie), 737 F.3d 1034, 1037 (6th Cir. 2013) (citation omitted)); In re Royal Manor Mgmt., 525 B.R. 338, 346 (B.A.P. 6th Cir. 2015) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 44, 111 S. Ct. 2123, 2138 (1991)). Likewise, a bankruptcy court’s use of its inherent powers is reviewed for an abuse of discretion. Chambers, 501 U.S. at 55 (citing Link v. Wabash R. Co., 370 U.S. 626, 633, 82 S. Ct. 1386, 1390 (1962).

“An abuse of discretion occurs if the [bankruptcy] court relies on clearly erroneous findings of fact, applies the wrong legal standard, misapplies the correct legal standard when reaching a conclusion, or makes a clear error of judgment.” Miller v. Countrywide Bank, N.A. (In re Countrywide Fin. Corp. Mortg. Lending Pracs. Litig.), 708 F.3d 704, 707 (6th Cir. 2013) (quoting Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 536 (6th Cir. 2012)).

“Sanctions based upon an erroneous view of the law or an erroneous assessment of the evidence is necessarily an abuse of discretion.” Hoover v. Jones (In re Jones), 546 B.R. 12, 16 (B.A.P. 6th Cir. 2016) (citing Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S. Ct. 2447, 2461 (1990); Salkil v. Mount Sterling Tp. Police Dept., 458 F.3d 520, 527–28 (6th Cir. 2006)).

The question of whether a bankruptcy court has violated the right to due process is reviewed de novo. Liberte Capital Group, LLC v. Capwill, 421 F.3d 377, 382 (6th Cir. 2005); Haffey v. Crocker (In re Haffey), 576 B.R. 540, 543 (B.A.P. 6th Cir. 2017). See also California Palms Addiction, Recovery Campus, Inc. v. Vara, No. 4:22-CV-0812, 2023 WL 2664284, at *6 (N.D. Ohio Mar. 27, 2023), aff’d sub nom. In re California Palms Addiction Recovery Campus, Inc., 87 F.4th 734 (6th Cir. 2023).

FACTS

On August 22, 2025, Attorney Thomas Jay Brown entered his appearance for the debtors in 123 bankruptcy cases pending in TNWB. The Bankruptcy Court noted that for some debtors, Mr. Brown was the fifth attorney from the firm Clark & Washington to appear in their case. The Bankruptcy Court set three of these cases for hearing on September 11, 2025. Mr. Brown failed to appear. Instead, Attorney Lauren Pritchett appeared remotely in each of the three cases and asked for a continuance of the scheduled hearings.

Ms. Pritchett had not previously entered an appearance in any of the three cases. At the September 11th hearings, Ms. Pritchett informed the Bankruptcy Court that she was asked to appear in these cases at the last minute because Mr. Brown had been dismissed from Clark & Washington the day prior. Ms. Pritchett further revealed that she had never met the clients in these cases and could not tell the Court whether Mr. Brown had ever met any of his clients. Upon inquiry, the Bankruptcy Court determined Clark & Washington’s current managing partner to be either Attorney Richard H. Thompson or Attorney Emory L. Clark.

The Bankruptcy Court later discovered that Ms. Pritchett had not yet been admitted to practice in TNWB at the time of the hearing. On September 17, 2025, the Bankruptcy Court entered an Order to Show Cause Whether Individual Attorneys Should Be Held In Contempt of Court And Firm And Its Attorneys Be Prevented From Practicing In The Bankruptcy Court For The Western District of Tennessee (“OSC”). (OSC, Case No. 25-08010, ECF No. 1.) The OSC indicated that sanctions were being considered against Clark & Washington, as well as against its individual attorneys Emory L. Clark, Richard H. Thomson, Thomas Jay Brown, and Lauren Pritchett.

The OSC recited the Bankruptcy Court’s statutory and inherent authority to impose sanctions before turning to the relevant factual background. The OSC then listed three pages of potential violations, beginning with the assertion that “The actions of the individual attorneys and Clark & Washington, PC appear to violate the local rules of this court and violate the letter and the spirit of the Tennessee Code of Professional Conduct.” (Id.) The first citation to a specific local rule regarded Ms. Pritchett’s unauthorized appearance before the court:

(b) The bar of this Court shall consist of all persons admitted to practice before the United States District Court for the Western District of Tennessee. See Local Rules of the United States District Court, Western District of Tennessee. As a courtesy, every newly admitted attorney should be introduced to the bankruptcy judges by an attorney previously admitted to practice before this Court.

. . .

(d) Representation of Good Standing. Unless the Court is affirmatively advised to the contrary, an attorney appearing before the Court on behalf of a client affirmatively represents that he is in compliance with subsection (a) or (b) above and further represents that he is not presently disbarred or suspended from practice before any other court. (OSC at 5 (citing TNWB Local Bankruptcy Rule 1001-3(b)).)

Following discussion of Ms. Pritchett’s apparent unauthorized appearance, the Bankruptcy Court then provided excerpts from the Tennessee Supreme Court Rules and the Tennessee Code of Professional Conduct, including the rules for diligence and the responsibilities of partners, managers, and supervisory lawyers. Under these rules, the Bankruptcy Court asserted various potential violations, including: 1) that the Court could not determine why Mr. Brown had been substituted as counsel for the 123 cases in the first place; 2) that Mr. Brown appeared to have abandoned his clients without the Court’s authority; 3) that the firm displayed improper managerial authority by directing an attorney who was not yet admitted to the bar of the Court to nevertheless appear without prior notice to the Court; and 4) that the firm and the named attorneys generally violated the trust of their clients and took advantage of its remote appearance privileges.

Accordingly, the OSC ordered that the named attorneys and a representative of the firm appear in person on October 2, 2025 to “show cause, if any, why the individual attorneys should not be held in contempt of this Court for violations of the Local Rules of this Court and the Tennessee Rules of Professional Conduct and why Clark & Washington, PC, and all its attorneys should not be suspended from practice before this Court.” (Id. at 8-9.) Clark & Washington filed its Response on September 29, 2025. (Response to OSC, Case No. 25-08010, ECF No. 7.)

The Bankruptcy Court held the show cause hearing on October 2, 2025. The Court heard from all four attorneys named in the OSC. Mr. Brown began by providing a history of his employment. He further explained that he had not specifically authorized his substitution in the 123 cases in question. Mr. Brown testified that he had “expressed interest” but that the omnibus substitution had been filed without his permission or signature. Mr. Brown testified, “Your Honor, I’m not sure what happened. I can tell you that I never touched ECF.” (Tr. Oct. 2, 2025 H’rg at 4:23–24, Case No. 25-08010, ECF No. 13.) Mr. Brown further explained that following his termination on September 10th, he assumed he was not required to individually withdraw from the cases and that “[a]ll resources were cut.” (Tr. Oct. 2, 2025 H’rg at 4:2–6.)

The Court then turned attention to Ms. Pritchett and Mr. Thomson. Ms. Pritchett explained that, unbeknownst to her, a payment processing issue led to her appearance prior to her official admission to practice before TNWB. It appears that Ms. Pritchett was under the impression that she had been duly admitted to practice in TNWB until receiving the Bankruptcy Court’s OSC.

Mr. Thomson testified that he had not previously heard that Mr. Brown did not authorize the substitutions. Mr. Thomson also explained that the firm had recently undergone “lots of staffing changes.” (Id. at 9:1) He further explained that while Clark & Washington had attorneys who were admitted to practice before TNWB, the firm did not maintain a physical office in the district.

Mr. Clark then testified that he had no personal knowledge about the circumstances giving rise to the OSC, but that the firm would look into the situation. The Bankruptcy Court then directed Clark & Washington to investigate the circumstances and continued the hearing to October 30, 2025, clarifying that Ms. Pritchett and Mr. Clark need not appear further because the Court was satisfied with their explanations regarding their personal involvement. The Court stated that the issues remained as to the possible suspension of the firm Clark & Washington.

Accordingly, on October 7, 2025, the Bankruptcy Court entered an order withdrawing its OSC with respect to Attorneys Emory L. Clark and Lauren Pritchett, finding that “[u]pon statements by Ms. Pritchett and Mr. Clark, the Court is satisfied that neither of them intentionally violated the local rules of this Bankruptcy Court concerning the admission of attorneys to practice.” (Order Withdrawing Order to Show Cause as to Lauren Pritchett and Emory L. Clark at 1, Case No. 25-08010, ECF No. 14.)

On October 20, 2025, Mr. Thomson filed a Supplemental Response on behalf of himself and Clark & Washington. (Supp. Response, Case No. 25-08010, ECF No. 19.) The Response provided an email chain as support for its position that Mr. Brown had explicitly agreed to assume representation of the TNWB clients. The email chain shows a message from an office manager, Ann McCammon, addressed to Mr. Thomson, Mr. Clark, Mr. Brown, and Mr. Ryan Carter, requesting a volunteer to take on the Memphis cases. The email chain shows that Mr. Brown replied, “I’ll do it…Memphis is not at all like Nashville.” (Id. at 2–3.) The email chain does not show a response to Mr. Brown’s message. The following three messages between Ms. McCammon, Mr. Thomson, and Mr. Clark discussing potential allocations of responsibilities between Mr. Brown and other personnel did not include Mr. Brown as a recipient. Subsequently, the Supplemental Response admitted that notwithstanding his apparent consent in the initial email, Mr. Brown should have been given an opportunity to review the motion to substitute before his signature was affixed and his credentials used, as is required by the Court’s rules.

On October 30, 2025, the Bankruptcy Court resumed the hearing on the OSC. Mr. Thomson appeared on behalf of himself and Clark & Washington, while Mr. Brown appeared on his own behalf. The Bankruptcy Court attempted to resolve the confusion as to how it was possible that pleadings were filed under Mr. Brown’s ECF credentials without his authorization.

Mr. Thomson admitted that he could not provide any paper trail showing that Mr. Brown had directly reviewed or signed the motions to substitute him as counsel. Mr. Thomson asserted that it appeared the firm’s paralegals or office staff had prepared the motions and filed them based on Mr. Brown’s prior email agreeing to take the Memphis cases.

Mr. Brown testified that he never saw an email from a paralegal in the firm’s Knoxville office requesting his “information” in order to put the “matters on ECF.” (Tr. Oct. 30, 2025 Hr’g at 9:14-19.) Instead, Mr. Brown asserted that he “opened that email about three or four weeks [prior to the October 30th hearing] when [he] got access to it.” (Id. at 9:25-10:8.) He further testified that he got a call, which he later discovered coincided with the unread email, while getting lunch from the convenience store on the bottom level of the building, “saying, hey we need to get your information so we can fix this ECF problem.” Mr. Brown testified that he gave the office staff his information.

Mr. Brown then testified that later communications from either Ms. McCammon or Mr. Thomson directed him not to worry about the firm’s Memphis clients and further stated that he had no Memphis duties. It appears that additional evidence of those communications was never officially presented to the Bankruptcy Court, and if it was, it is not reflected in the hearing transcript. After Mr. Brown’s explanation, the Bankruptcy Court, Mr. Brown, and Mr. Thomson engaged in dialogue attempting to determine whether Mr. Brown was in fact the managing attorney for the Memphis office and who his boss might have been, without a clear resolution of the question.

The Bankruptcy Court concluded the hearing by informing the attorneys that it was likely to enter an order suspending the firm Clark & Washington from practicing before TNWB, and that it would send a referral to the disciplinary board for their review. The Bankruptcy Court commended both Mr. Brown and Mr. Thomson for their efforts to explain the circumstances. On November 4, 2025, the Bankruptcy Court entered an order. The Bankruptcy Court found:

[A] paralegal or office manager, Ann McCammon, who has retired, prepared and filed the motions to substitute counsel. It seems that she obtained Mr. Brown’s log-in credentials without explaining her purpose for obtaining them, or perhaps that Mr. Brown did not read a contemporaneous email explaining her purpose for obtaining his credentials. In any event, the firm attempted to divide care for the firm’s Memphis clients between two attorneys, Mr. Brown and Mr. Ryan Carter, neither of whom maintained an office for the practice of law in the Western District of Tennessee, and without obtaining the consent of their clients to do so. (Final Order on OSC at 2, Case No. 25-08010, ECF No. 23.)

The Bankruptcy Court held that Clark & Washington and its attorneys be “indefinitely suspended from practice before the Bankruptcy Court for the Western District of Tennessee.” (Id.) The order specifically noted that Mr. Brown was “not in contempt of this Court but rather has acted in an exemplary manner and is commended by the Court for his professionalism in a very difficult situation.”

On November 13, 2025, Mr. Thomson filed a Motion for additional findings, observing that the Final Order did not address whether he individually would be held in contempt. (Motion for Additional Findings, Case No. 25-08010, ECF No. 25.) The Bankruptcy Court granted the Motion for additional findings on November 20, 2025 and on November 21, 2025 entered an Amended Final Order (“Amended Final Order”) which appended the following:

The Court inadvertently neglected to make a final adjudication concerning Mr. Thomson’s conduct before the Court. Mr. Thomson is a Georgia attorney who was identified by Ms. Pritchett as the managing partner for Clark & Washington. Mr. Thomson had no personal knowledge concerning the activities of the Tennessee attorneys handling Memphis cases, but he impressed the Court with his diligence in discovering what facts he could concerning these unhappy events.

. . .

It is further ORDERED and the Court finds that Richard Thomson is not in contempt of this Court but has acted diligently in assisting the Court in finding the facts underlying the need for the Court’s initial order and in finding substitute counsel for Clark & Washington’s Western District of Tennessee clients. Mr. Thomson is likewise commended. (Amended Final Order at 3, Case No. 25-08010, ECF No. 30.)

On December 1, 2025, the firm filed a timely notice of appeal.

DISCUSSION

1. Did the Bankruptcy Court abuse its discretion by sua sponte suspending Appellant

and its staff attorneys from representing debtors in bankruptcy cases filed in the

Western District of Tennessee solely because Appellant lacks a physical office in that

district and its staff attorneys are not physically present there?

The Bankruptcy Court entered a Final Order suspending Clark & Washington and all its individual attorneys from practicing before TNWB. The Final Order permitted the firm to seek relief from the suspension by filing “a motion to be relieved from this order and demonstrat[ing] that it has adopted policies consistent with the local rules of this court and the proper representation of consumer bankruptcy clients.” (Final Order at 3.) Appellant asks the Panel to find that the Court abused its discretion by imposing the suspension solely based on Appellant’s lack of a physical office in TNWB.

In the OSC, the Court cited § 105 as the authority for its actions regarding Clark & Washington. Section 105 empowers bankruptcy courts to “sua sponte, tak[e] any action or mak[e] any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.” 11 U.S.C. § 105(a). Courts have held that § 105 includes the power to impose sanctions for misconduct. Grossman v. Wehrle (In re Royal Manor Mgt., Inc.), 652 F. App’x 330, 342 (6th Cir. 2016) (affirming sanctions imposed under § 105); John Richards Homes Bldg. Co., L.L.C. v. Adell (In re John Richards Homes Bldg. Co., L.L.C.), 404 B.R. 220, 227 (E.D. Mich. 2009); Forson v. Nationstar Mortg. LLC (In re Forson), 583 B.R. 704, 712 (Bankr. S.D. Ohio 2018); In re Ludwick, 185 B.R. 238, 245 (Bankr. W.D. Mich. 1995).

The Bankruptcy Court also cited its inherent power to manage its own affairs. The inherent power of bankruptcy courts as federal courts includes the authority to impose sanctions for improper conduct. Knowles v. Zinni (In re Zinni), 261 B.R. 196, 203 (B.A.P. 6th Cir. 2001); In re Hake, 464 B.R. 61, 61 (Table), 2006 WL 2621116 at *9 (B.A.P. 6th Cir. Sept. 14, 2006); In re Gorges, 590 B.R. 771, 791 (Bankr. E.D. Mich. 2018). This authority to sanction, in turn, includes the power to “suspend or disbar lawyers.” In re Snyder, 472 U.S. 634, 643, 105 S. Ct. 2874, 2880 (1985) (citations omitted). The Sixth Circuit recognizes a significant check on this authority, specifically that the invocation of a court’s inherent powers to impose sanctions “requires a finding of bad faith or of conduct tantamount to bad faith.” BDT Products, Inc. v. Lexmark Int’l., Inc., 602 F.3d 742, 752 (6th Cir. 2010); Youn v. Track, Inc., 324 F.3d 409, 420 (6th Cir. 2003) (quoting First Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 501, 517 (6th Cir. 2002)). See also Roadway Express, Inc. v. Piper, 447 U.S. 752, 777, 100 S. Ct. 2455, 2465 (1980) (“any sanction under the court’s inherent powers” should first include a finding that “counsel’s conduct constituted or was tantamount to bad faith[.]”).

The Panel has previously highlighted the importance of the evidence justifying sanctions when evaluating their legitimacy; it is an abuse of discretion to impose sanctions based upon an erroneous assessment of the evidence. Lane, 604 B.R. at 27 (citing Montedonico v. Blasingame (In re Blasingame), 559 B.R. 676, 679 (B.A.P. 6th Cir. 2016), aff’d, 709 F. App’x 363 (6th Cir. 2018). This is because the sanction must be “commensurate with the egregiousness of the conduct.” Mapother & Mapother P.S.C. v. Cooper (In re Downs), 103 F.3d 472, 478 (6th Cir. 1996); accord In re Fordu, 201 F.3d 693, 711 (6th Cir. 1999).

For example, in Mills the bankruptcy court explained that while the discretion to select sanctions is broad, the court must “exercise great care” and “impose the minimum sanction necessary to both protect the public and deter future misconduct.” In re Mills, No. 15-11766, 2018 WL 10323376, at *19 (Bankr. W.D. Tenn. July 24, 2018) (citing Cavender v. U.S. Xpress Enters., Inc., 191 F. Supp. 2d 962, 965 (E.D. Tenn. 2002); In re Burton, 442 B.R. 421, 467 (Bankr. W.D.N.C. 2009)). In Cavender, the court noted:

. . . motions to disqualify counsel in a lawsuit are very sensitive and require the Court to exercise judgment with an eye toward upholding the highest ethical standards of the profession, protecting the interest of the litigants in being represented by the attorney of their choosing, protecting the loyalty and confidences a prior client may have placed in a law firm or an attorney, and the overriding societal interests in the integrity of the judicial process. Cavender, 191 F. Supp. 2d at 965.

In the instant case, it appears that the Bankruptcy Court imposed an indefinite suspension without making specific findings.²2. Because the Bankruptcy Court failed to make specific findings regarding the issues with Clark & Washington’s representation of its clients, the Panel would be unable to evaluate whether the firm’s conduct was in bad faith for purposes of an inherent powers analysis. The Bankruptcy Court also failed to identify what, if any, local rules or state rules of professional responsibility ultimately formed the basis for the suspension of Clark & Washington. Significantly, while the OSC warned of particular alleged misconduct and the Court’s powers to sanction, the Final Order imposing the suspension does not state with specificity which rules the firm violated, if any, nor does it cite under what specific authority it imposes the suspension, or explain why the sanction is appropriately tailored to the alleged misconduct.

It appears that Ms. Pritchett may have violated TNWB Local Bankruptcy Rule 1001- 3(b) by appearing for a hearing prior to her admission to practice. And further that Mr. Brown and the firm’s supervisory attorneys may not have complied with the Tennessee Supreme Court Rules and the Tennessee Rules of Professional Conduct. But the Bankruptcy Court’s Final Order does not find a violation of those specific rules. The Court made no specific findings about any of the conduct, or any deficiencies in oversight and supervision that may have led to the substitutions of Mr. Brown or the appearance of Ms. Pritchett.

The OSC further suggested that actions may have been taken on behalf of clients without their consent. However, the Bankruptcy Court’s Final Order does not elaborate on the issue or give any specific examples of clients who failed to consent to any particular substitution of one attorney for another. Moreover, the Final Order does not provide any factual finding as to whether the clients hired Clark & Washington to represent them, or whether they engaged an individual attorney.³3. Section 528(a) requires that bankruptcy attorneys have a “written contract” with a debtor-client. It does not appear that any of the underlying written contracts were entered into evidence, or that the provisions were reviewed to determine whether the debtor-clients hired the firm or an individual attorney for the firm. Additionally, the filing of entries of appearance under Mr. Brown’s credentials without his knowledge or express authorization would likely violate, at least, the Western District of Tennessee’s Electronic Case Filing Guidelines providing that “No Filing User or other person may knowingly permit or cause to permit a Filing User’s ECF account to be used by anyone other than an agent of the Filing User authorized to use such ECF account.”⁴4. Revocation of the firm’s ECF privileges could have achieved substantially the same outcome as the suspension if the Bankruptcy Court had found violations of ECF policies. But the Bankruptcy Court made no explicit finding of such a violation.

Even given the lack of specific alternate findings, Appellant has not demonstrated that the sole basis for Appellant’s suspension was the representation of consumer debtors without an in- district office. Instead, the Court considered and discussed a number of potential violations not related to office location. Those concerns included concerns encompassing client representation:

They get to choose who their attorney is. That is so important in all of this . . . This was—they were just treated like widgets. I mean, I can’t tell you how offended I am at the thought that a person can have an attorney one day and the next day a different one and no indication that the clients were consulted. That’s offensive to me. (Tr. Oct. 2, 2025 H’rg at 20:1–9.) In summary, the Court’s consideration of the special vulnerability of debtors does not mean that the suspension order rested solely⁵5. The record does reflect that the failure of Clark & Washington to maintain a local office was a substantial factor in the imposition of sanctions. Using the absence of a local office as a basis for sanctions is problematic, as is discussed below. on Appellant’s office location, particularly when the Bankruptcy Court weighed other potentially sanctionable conduct unrelated to office location.

Nevertheless, the Panel has explained the reasons why it must remain “mindful of the different adjudicative roles of a trial court and appellate court”:

A trial court makes findings of fact and states its conclusions of law based on the evidence presented and arguments made, while the appellate court merely reviews the decision of the trial court by applying the appropriate standard of review. Fed. R. Bankr. P. 7052 (incorporating Fed. R. Civ. P. 52(a)(1)); Taglieri v. Monasky, 907 F.3d 404, 408-09 (6th Cir. 2018). Because the bankruptcy court failed to state with specificity its factual findings as to the evidence at trial and did not explain its legal conclusions, we are unable to meaningfully review the trial court's decision and remand for further proceedings[.] Woods v. Landingham (In re Landingham), No. 23-8018, 2026 WL 751643, at *9 (B.A.P. 6th Cir. Mar. 17, 2026).

Here, the Bankruptcy Court’s failure to state factual findings and set forth its conclusions of law contravenes those roles and warrants remand.

2. Did the Bankruptcy Court violate Appellant’s right to due process when it determined that it is permissible for creditors to be represented by out-of- district law firms, but consumer debtors may not be represented by similarly situated debtors’ firms?

Appellant additionally challenges the Bankruptcy Court’s sanctions on the basis of procedural due process and substantive due process. First, because “prior to suspension, Appellant had no notice that it was subject to suspension for not maintaining an office for the practice of law in TNWD.” (Appellant’s Br. at 17, BAP Case No. 25-8020, ECF No. 8.) And second, because the Bankruptcy Court “de facto adopted a new local rule, sua sponte” that “bans out-of-district debtors’ firms but admits out-of-district creditors’ firms.” (Id. at 17, 38) Appellant’s substantive due process challenge largely relies on the reasoning set forth in Frazier v. Heebe, 482 U.S. 641, 107 S. Ct. 2607 (1987). Because the due process challenge is closely related to the issues related to the failure to state factual findings and apply them to conclusions of law, the Panel need not reach a dispositive conclusion on the due process issues. The finding of an abuse of discretion warrants remand on its own accord. However, the Panel will briefly address Appellant’s due process concerns.

The Sixth Circuit has recognized that “attorney disciplinary proceedings are quasi- criminal . . . [and] entitle attorneys facing disbarment to procedural due process.” In re Justice, No. 20-5479, 2021 WL 3808965, at *3 (6th Cir. Aug. 26, 2021). This entitlement includes fair notice and an opportunity to show cause why the practitioner should not be suspended or disbarred. In re Cook, 551 F.3d 542, 549 (6th Cir. 2009) (citing In re Ruffalo, 390 U.S. 544, 550–51, 88 S. Ct. 1222, 1225–26 (1968); Theard v. United States, 354 U.S. 278, 282, 77 S. Ct. 1274, 1276 (1957). Due process is required both for sanctions levied for violations of local and ethical rules and those authorized under a court’s inherent powers. In re Mills, 2018 WL 10323376, at *19.

The Sixth Circuit has held that “due process is satisfied by issuance of an order to show cause why sanctions should not be imposed and by providing an opportunity to respond.” Cook v. Am. S.S. Co., 134 F.3d 771, 775 (6th Cir. 1998) (quoting Julien v. Zeringue, 864 F.2d 1572, 1575 (Fed. Cir. 1989)). See also NPF Franchising, LLC v. SY Dawgs, LLC, 37 F.4th 369, 377 (6th Cir. 2022) (“a court must give notice to the party facing sanctions and an opportunity to be heard.”). Here, the attorneys were given both the opportunity to show cause and respond to the OSC, which included an express threat of suspension. The opportunity to respond included two separate full hearings. Thus, to the extent that Appellant argues it did not receive notice as to the possibility of suspension, the argument must fail. Compare, In re Rose, 314 B.R. 663, 690 (Bankr. E.D. Tenn. 2004) (denying due process challenge where bankruptcy court warned of possible sanctions and provided an opportunity to show why it should not be imposed), with Gray v. U.S., No. 23-3723, 2025 WL 40818, at *2 (6th Cir. Jan. 3, 2025) (vacating sanction because the appellant was not warned of potential sanctions).

Here, the Appellant’s due process challenge does not arise from a lack of notice regarding the purpose and extent of the hearings, but rather the fact that there was no notice that a debtor law firm was required to maintain a local office. The absence of prior notice of a local office requirement was not clearly addressed in the Court’s limited findings regarding the wide range of potential misconduct outlined in the OSC. Courts have variously held that when imposing sanctions, particularly those as severe as suspension or disbarment, the sanctioning court must be specific in explaining the nexus between its authority and the alleged misconduct so as to provide fair notice of the particular conduct and rationale. In re Moncier, 569 F. Supp. 2d 725, 728 (E.D. Tenn. 2008) (“It is axiomatic that the suspension is personal and specific to the attorney disciplined.”). E.g., Roberson v. Comm. on Grievances for the U.S. Dist. of Columbia (In re Robertson), No. 19-5215, 2022 WL 683404, at *3 (D.C. Cir. Feb. 11, 2022).

As previously discussed, while the OSC contemplated, and thus warned Appellants of, specific rules violations and improper conduct, the Court made no specific findings related to those rules or conduct before imposing the suspension. The OSC clearly forewarned Appellant of the specific possibility of suspension, both in the title and the body of the order. The initial hearing revealed a troubling narrative underlying the filing of substitutions and consent issues, which elicited justifiable concern from the Court about adequate representation of local consumer debtors. The Court also questioned whether there was a potential abuse of remote appearance privileges. Further, the record suggests that Mr. Brown may never have had any personal contact with the numerous debtors for which he was substituted as counsel.

While the Court expressed concern for proper representation of local consumer debtors, and developed the view that the firm was perhaps exploiting their permission to appear remotely, it does not appear that the Court extemporaneously adopted a new local rule manifesting discrimination against out-of-district consumer debtors’ firms, as alleged by the Appellant. First, an individual bankruptcy judge cannot create a “local rule”. See Fed. R. Bankr. P. 9029(a) (local rules generally must be approved by the District Court, which may delegate such power to “the district’s bankruptcy judges”. There is no evidence that there has been any such delegation in TNWB, much less that such delegation was to any individual judge.)

Appellant’s argument that the Court de facto created a new local rule does not squarely present a question of law warranting de novo review as to the validity of a local rule under 28 U.S.C. § 2072 or otherwise, nor does it squarely warrant an abuse of discretion analysis as to the application of a local rule.⁶6. Bankruptcy judges are permitted by the Federal Rules of Bankruptcy Procedure to regulate practice before them, when there is no controlling law, through administrative orders. Fed. R. Bankr. P. 9029(c). Indeed, it appears the Bankruptcy Court acted with concern for what it characterized as a lack of legislative foresight on the issue. (Tr. Oct. 2, 2025 H’rg at 21:13–22:4.) At the October 2nd hearing, the Bankruptcy Court recited a quote as an analogy: “Congress never made a rule to prevent [this] conduct because Congress never envisioned that such conduct would occur.” The Court also stated that it had referred the issues to the Local Rules Committee for consideration. There are two significant limitations to regulation under Rule 9029(c). First, any directive issued by a court under Rule 9029(c) must be “consistent with federal law, these rules, the Official Forms, and the district’s local rules.” Fed. R. Bankr. P. 9029(c). Second, any sanctionable conduct for violation of such a directive must essentially abide by the same notice requirements as other sanction—in the case that an individual directive is violated, “a sanction or other disadvantage may be imposed for noncompliance only if the alleged violator was given actual notice of the requirement in the particular case.” Id.; 10A Collier on Bankruptcy ¶ 9029.05 (16th ed. 2026). See 10A Collier on Bankruptcy ¶ 9029.01[1] (16th ed. 2026) (discussing the standards of review applicable to local rules). Because of the array of potential misconduct considered, the Court alluded to local and ethical rules on multiple occasions. But the record does not reflect any clear statement that the Bankruptcy Court was creating a new local rule requiring consumer debtors to be represented by in-district counsel. Nor did the Court attempt to apply an already existing local rule with a similar requirement, as no such rule existed.⁷7. Like many other districts, as Appellant points out, the Western District of Tennessee does have a local rule affording courts discretion to require a party to engage local counsel if it is determined to be necessary. Under TNWD Local Rule 83.4(i), the Court “may at any time in its sole discretion” require out-of-district counsel to engage local counsel that meets its requirements. In function if not in form, the Bankruptcy Court acted under the authority of this rule when it directed the firm to work with the United States Trustee’s Office to find suitable local counsel. (Tr. Oct. 2, 2025 H’rg at 18:11–17.) Clark & Washington did not oppose or appeal this instruction. The firm reported to the Court that it had contacted the Office of the United States Trustee, and subsequently the local bar association, and had found a local attorney for all of its cases in TNWB. (Supp. Response at 7, Case No. 25-08010, ECF No. 19.)

Even if the actions taken here were to warrant a review of a local rule’s validity or application, Appellant’s Supreme Court authority would only be somewhat supportive of its position. In Frazier, the Supreme Court invalidated a formally adopted local rule requiring residence and physical office presence within a particular state in order to practice within a particular federal district of that state. Frazier, 482 U.S. 641. The Eastern District of Louisiana’s local rule requiring “continuous and uninterrupted Louisiana residence or maintenance of a Louisiana law office for continuing eligibility in that bar” was struck down for discrimination against out-of-state attorneys without sufficient justification. Id. at 643. It was described by the Court as “unnecessary and irrational.” Id. at 649. The Court explained the rule lacked justification because it perceived “no link between residency within a State and proximity to a courthouse.” Id. at 642. It is conceivable that an in-state office could be twice as far from the courthouse as an out-of-state office just across the border. Id. at n.9. The Supreme Court then suggested that a rule requiring counsel to maintain an office in the district would be more compelling. Id. at 650–51.

Noteworthy too is that the Court left the petitioner’s due process challenge unaddressed despite the rule having passed muster under the lower appellate court’s rational basis review and the district court’s heightened scrutiny review. Instead, the Court acted under its inherent supervisory power. Id. at 645–46.

By comparison, a dissent of three justices explicitly concluded that the rule did not violate the Fifth Amendment Due Process Clause. Id. at 655 (citing Supreme Court cases in support of the “nearly exclusive authority” of federal courts over bar membership decisions). Even if it may be true that Frazier displays a disfavor for local rules of this kind, it does not directly stand for the proposition that such a rule runs afoul of Appellant’s substantive due process rights.

While the use of Frazier to invalidate a local bankruptcy rule requiring a local office would not be automatic, the language of the Supreme Court’s decision certainly supports the idea that such a requirement is disfavored. Thus, the use of the absence of a local office as a factor in attorney discipline would require, at a minimum, a strong body of evidence and factual findings that are not part of the record or the Final Order.

Nothing in this opinion should be read to limit the bankruptcy court’s authority to impose or withhold a sanction on remand, provided that the Court’s justification is stated with sufficient particularity. On remand the Bankruptcy Court may show specific ways that the conduct of Clark & Washington negatively impacted debtors in specific cases, warranting suspension of the firm. However, the Panel finds that the Amended Final Order does not sufficiently establish those grounds.

CONCLUSION

The Amended Final Order suspending Clark & Washington is hereby vacated and the case is remanded for further factual findings consistent with this Opinion.