Papadakis v. Zelis

In Papadakis v. Zelis (1991) 230 Cal. App. 3d 1385, an attorney named Zelis was sued by former clients whom he had persuaded to invest in a limited partnership in which he was the general counsel. The litigation was settled pursuant to an agreement which required that Zelis stipulate to a judgment against himself. After various failed attempts by Zelis to undoe his agreement, the trial court entered judgment pursuant to the parties' stipulation. Zelis appealed the judgment. This court issued an order to show cause stating that we were considering imposing sanctions against Zelis for filing a frivolous appeal. ( Id. at p. 1389.) Zelis responded by notifying the court that he had filed a bankruptcy petition, which he claimed prevented us from considering the imposition of sanctions against him. (Ibid.) In rejecting this argument, we reasoned that courts have inherent regulatory power to prevent abuses of the court system and that the automatic stay is not an "escape mechanism" from the enforcement of this important regulatory power. ( Id. at p. 1389 .) Thus the bankruptcy statute expressly excepts from the reach of the automatic stay an "'"action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power; . . . ."' " (Ibid.) We concluded that "the imposition of sanctions by the courts of this state for attorneys' frivolous or abusive litigation tactics" fell within that statutory exception. (Ibid.)