Third Circuit disposition — 24-1781

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
No. 24-1781
________________
In re: ROBIN AQUILINO, LOUIE JOSEPH AQUILINO,
Appellants
________________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 1:23-cv-01099)
District Judge: Honorable Karen M. Williams
________________
Argued on January 29, 2025
Before: KRAUSE, PORTER, and ROTH, Circuit Judges
(Opinion filed: April 24, 2025)
Shawn D. Hutchison [ARGUED]
Law Offices of S. Daniel Hutchison, P.C.
135 N Broad Street
Woodbury, NJ 08096

-- 1 of 32 --

2
Counsel for Appellants
Daniel J. Dugan [ARGUED]
Spector Gadon Rosen & Vinci P.C.
1635 Market Street
7th Floor
Philadelphia, PA 19103
Counsel for Appellee
Wendy Cox [ARGUED]
United States Department of Justice
Executive Office for United States Trustees
441 G Street NW
Suite 6150
Washington, DC 20530
Counsel for Amicus Curiae United States Trustee for
Regions 3 and 9 in Support of Neither Party
________________
OPINION OF THE COURT
________________
KRAUSE, Circuit Judge.
To effectuate its core purposes of maximizing
recoveries for creditors and giving debtors a fresh start, our
bankruptcy system demands openness and transparency. So
when attorneys represent debtors, the Bankruptcy Code
requires them not only to disclose the fees they originally
charge and collect for services rendered in connection with the

-- 2 of 32 --

3
case, 11 U.S.C. § 329(a), but also to supplement that disclosure
“within 14 days after any payment or agreement not previously
disclosed,” Fed. R. Bankr. P. 2016(b). Here, Appellee, the law
firm of Spector Gadon Rosen & Vinci P.C., arguably failed to
do the former and most certainly failed to do the latter,
resulting in two sanctions by the Bankruptcy Court:
disgorgement of collected fees and cancellation of its
remaining fee agreement with Debtors-Appellants Robin and
Louie Aquilino. But the District Court reversed that sanctions
order, concluding the Seventh Amendment entitled Spector
Gadon to a jury trial.
As explained below, that was error, so we will reverse
the District Court’s judgment, reinstating that of the
Bankruptcy Court.
I. Background
To fully understand the parties’ arguments and the
relevance of various provisions, we first explain some
mechanics of Chapter 7 bankruptcies and the Bankruptcy
Code’s fee-disclosure requirements before turning to the facts
of this case.
A. Statutory Framework
1. Chapter 7
In Chapter 7 bankruptcies, individual debtors liquidate
their nonexempt property to receive a discharge of eligible
prepetition debts. Like all bankruptcies, this process begins by
filing a petition under the Bankruptcy Code, which
automatically creates an estate comprised of “all legal or

-- 3 of 32 --

4
equitable interests of the debtor in property as of the
commencement of the case.” 11 U.S.C. § 541(a)(1). A
Chapter 7 trustee is appointed “immediately after the order for
relief,” 6 Collier on Bankruptcy ¶ 701.01 (16th ed. 2024), to
administer the estate, liquidate assets, and distribute the
proceeds to creditors, see 11 U.S.C. §§ 701, 702, 704. Because
the Bankruptcy Code makes the Chapter 7 trustee “the
representative of the estate,” id. § 323(a), the debtor (and its
attorney) neither controls nor works for the estate, see In re
Gilbert, 120 F.4th 114, 121 & n.2 (3d Cir. 2024).
Relative to the Chapter 7 trustee who conducts most of
the post-petition work, debtors and their attorneys have a
comparatively limited role. The Bankruptcy Code reflects this
division of labor by excluding Chapter 7 debtors’ attorneys
from the category of professionals whose fees may be paid
from the estate.1 See Lamie v. U.S. Tr., 540 U.S. 526, 538–39
(2004); see also 11 U.S.C. §§ 327(a), 330(a)(1). Instead—and
for that reason—Chapter 7 debtors generally pay their
attorneys before filing for bankruptcy in up-front, flat-fee
agreements. See Adam D. Herring, Problematic Consumer
Debtor Attorneys’ Fee Arrangements and the Illusion of
“Access to Justice”, Am. Bankr. Inst. J., Oct. 2018, at 32, 32.
And because many Chapter 7 consumer cases are relatively
simple, see 3 Collier on Bankruptcy ¶ 329.04[1][a] (16th ed.
2024), debtors and their attorneys can usually appraise a
1 In the unusual case, a Chapter 7 trustee may retain a debtor’s
attorney with approval of the bankruptcy court. See Lamie v.
U.S. Tr., 540 U.S. 526, 537 (2004). The scope of that
representation is tightly constrained, see 11 U.S.C. § 327(e),
and that provision is inapplicable here.

-- 4 of 32 --

5
reasonable fee for their legal services in connection with the
case without much difficulty.
2. Fee Disclosure Provisions
Given the need for transparency in bankruptcy cases,
the Code requires attorneys who represent debtors to “file with
the court a statement of the compensation paid or agreed to be
paid, if such payment or agreement was made after one year
before the date of the filing of the petition, for services
rendered or to be rendered in contemplation of or in connection
with the case by such attorney.” 11 U.S.C. § 329(a). Federal
Rule of Bankruptcy Procedure 2016(b) makes this disclosure
obligation “a continuing one,” In re Stewart, 970 F.3d 1255,
1258 (10th Cir. 2020), by requiring attorneys to supplement
their statements “within 14 days after any payment or
agreement not previously disclosed,” Fed. R. Bankr. P.
2016(b).
Together, these two provisions yield a “[p]lain and
simple” rule: “attorneys must inform the bankruptcy court of
their compensation and promptly update the filing if their fees
change.” In re Dordevic, 62 F.4th 340, 342 (7th Cir. 2023).
And to facilitate this disclosure, the Director of the
Administrative Office of the United States Courts has issued a
standard disclosure form, Bankruptcy Form 2030, for debtors’
attorneys to use.
B. Factual and Procedural Background
In April 2020, the Debtors petitioned for Chapter 7
bankruptcy in the United States Bankruptcy Court for the
District of New Jersey. Before their filing, they retained

-- 5 of 32 --

6
Spector Gadon as bankruptcy counsel and agreed to pay a flat
fee of $3,500 and a $335 filing fee. Spector Gadon disclosed
this agreement to the Bankruptcy Court on the petition date in
a form2 completed by one of its attorneys.3
Importantly for this case, section 6 of that form provides
that, in exchange for the fee charged by counsel—which
Spector Gadon identified as a $3,500 flat fee—counsel has
“agreed to render legal service for all aspects of the bankruptcy
case,” including prepetition analysis and advice of the Debtors’
financial situation, preparation of required petitions, schedules,
and statements, representation of the Debtors at the meeting of
creditors and confirmation hearing, and representation in
adversary proceedings and contested matters. App. 77. Under
the subsection entitled “Other provisions as needed,” Spector
Gadon listed “[p]re-bankruptcy planning, preparation of
[p]etition and [s]chedules, [and] attendance at [the §] 341(a)
hearing.” Id.
The form also contains a section that permits counsel to
enter any exclusions from the services it has agreed to provide
after the prompt, “By agreement with the debtor(s), the above-
disclosed fee does not include the following service.” Id.
Spector Gadon left that space empty. And at the conclusion of
the form, the Spector Gadon attorney “certif[ied] that the
foregoing is a complete statement of any agreement or
2 We attach Spector Gadon’s disclosure form as Appendix A.
As explained in note 16, infra, that form is materially identical
to the standard Bankruptcy Form 2030.
3 In its initial statement, Spector Gadon incorrectly stated that
it agreed to receive $2,500. It later filed a corrected disclosure
indicating the $3,500 fee.

-- 6 of 32 --

7
arrangement for payment to me for representation of the
debtor(s) in this bankruptcy proceeding.” Id.
As it turned out, contrary to the Debtors’ representation
that it would be a simple, no-asset bankruptcy, their case was
anything but. According to Spector Gadon, the Debtors
“withheld and concealed information regarding the existence
and/or value of their assets,” requiring it to “conduct[] its own
extensive valuation analysis of the Aquilinos’ properties
several times, correct[] the Aquilinos’ bankruptcy schedules
and other submissions several times, and defend[] the
Aquilinos in litigation” in the Bankruptcy Court. Answering
Br. 6. Unsurprisingly, the $3,500 the Debtors paid up front did
not cover all the additional work Spector Gadon had to do, so
Spector Gadon billed the Debtors for its post-petition services,
which, by August 2021, tallied approximately $151,000.
On August 23, 2021, the parties struck a deal to reduce
the Debtors’ fee bill to $113,000, with $100,000 to be paid
from the proceeds of the then-imminent sale of one of the
Debtors’ homes,4 and the balance and costs to be paid later.
Although that agreement (the Letter Agreement) was
memorialized in a contract the same day, Spector did not
disclose it to the Bankruptcy Court. Notwithstanding its
obligation to supplement its original filing “within 14 days
after any payment or agreement not previously disclosed,” Fed.
R. Bankr. P. 2016(b), the firm neither filed an additional form
nor amended its original disclosure.
4 The Chapter 7 trustee abandoned the property, meaning it was
no longer property of the estate and reverted back to the
Debtors. See 11 U.S.C. § 554(a).

-- 7 of 32 --

8
As with their original agreement, the Letter Agreement
did not play out as intended. When the Debtors did sell their
home, they never paid Spector Gadon. Instead, they kept the
money and used it to purchase a new home. Spector Gadon
then withdrew as their bankruptcy counsel and sued the
Debtors in the United States District Court for the Eastern
District of Pennsylvania, requesting a jury trial on its breach of
contract and related claims (the Collection Action). Before
answering that complaint, however, the Debtors promptly (but
unsuccessfully) sought to transfer venue to the District of New
Jersey or, in the alternative, a stay of these proceedings and, in
parallel, moved in the Bankruptcy Court in New Jersey for an
examination of the reasonableness of Spector Gadon’s fees
under § 329(a) and Bankruptcy Rule 2016(b).5
Spector Gadon, recognizing the preclusive effect that a
ruling from the Bankruptcy Court was likely to have on its
Collection Action, opposed that motion and sought to stay the
Bankruptcy Court proceeding. Notably, at the hearing held by
the Bankruptcy Court to allow for argument and evidence on
the motion, Spector Gadon did not contest the Bankruptcy
Court’s jurisdiction; to the contrary, it advised the Bankruptcy
Court “you have jurisdiction, but you should stay . . . because
this action is proceeding in the Eastern District [of
Pennsylvania].” App. 1279; see also id. (“I’m not saying you
don’t have jurisdiction over this, Your Honor. I’m saying that
you should stay this.”). In addition to arguing that the Seventh
Amendment entitled it to first proceed with a jury trial in the
Eastern District of Pennsylvania, Spector Gadon also urged
5 The United States District Court for the Eastern District of
Pennsylvania has since stayed proceedings pending resolution
of this appeal.

-- 8 of 32 --

9
that, in any event, it did not violate § 329(a) or Bankruptcy
Rule 2016(b) because it was not required to disclose post-
petition legal services, and it was Spector Gadon’s attorneys’
practice not to do so.
After the hearing, the Bankruptcy Court rejected
Spector Gadon’s arguments. In a thorough and well-reasoned
opinion, the Bankruptcy Court held that it had “core” subject
matter jurisdiction over the motion and that Spector Gadon
violated § 329(a) and Bankruptcy Rule 2016(b) by failing to
disclose the Letter Agreement. As a sanction for those
violations, the Bankruptcy Court ordered Spector Gadon to
“disgorge all fees it received in connection with the bankruptcy
case” and “disallow[ed] any other fees it is seeking to collect
that were incurred in connection with the bankruptcy case.” In
re Aquilino, No. 20-15628, 2023 WL 2191494, at *7 (Bankr.
D.N.J. Feb. 23, 2023).
On appeal to the District Court, Spector Gadon revised
its position and claimed the Bankruptcy Court lacked
jurisdiction to consider the Debtors’ motion. On that claim, the
District Court was unpersuaded. But on Spector Gadon’s
Seventh Amendment claim, it agreed the firm was entitled to a
jury trial in the Collection Action and that the Bankruptcy
Court’s ruling on the Debtors’ § 329(a) motion improperly
deprived the firm of that right. In reaching this result, the
District Court reasoned that because Spector Gadon filed
“neither a proof of claim nor an application for fees” from the
estate in the bankruptcy case, the firm had retained its right to
a jury trial. In re Aquilino, 660 B.R. 197, 205–06 (D.N.J.
2024). This appeal followed.

-- 9 of 32 --

10
II. Jurisdiction and Standard of Review
As addressed below, the Bankruptcy Court had
jurisdiction under 28 U.S.C. § 157(b)(1). The District Court
had appellate jurisdiction under 28 U.S.C. § 158(a), and we
exercise jurisdiction under 28 U.S.C. § 158(d)(1). While we
have not previously addressed what standard we employ to
review sanctions imposed by a bankruptcy court for violations
of § 329(a) or Bankruptcy Rule 2016(b), we see no reason to
depart from our settled standard of review for sanctions under
other provisions, such as Bankruptcy Rule 9011. See In re
Taylor, 655 F.3d 274, 282 (3d Cir. 2011). Thus, we review the
Bankruptcy Court’s imposition of sanctions for abuse of
discretion, see In re Prosser, 777 F.3d 154, 161 (3d Cir. 2015),
and the District Court’s interpretation of the Constitution and
Bankruptcy Code de novo, see In re Imerys Talc Am., Inc., 38
F.4th 361, 370 (3d Cir. 2022).
III. Discussion
Spector Gadon raises four arguments in support of
affirmance. First, it asserts the Debtors forfeited their
objection to Spector Gadon’s jurisdictional and Seventh
Amendment arguments in the District Court and this forfeiture
precludes our review of those issues here. Second, it argues to
us, contrary to its position before the Bankruptcy Court, that
the Bankruptcy Court lacked “core” subject matter jurisdiction
over the proceeding to examine fees under 11 U.S.C. § 329(a).
Third, it contends that the Seventh Amendment entitles it to a
jury trial in the § 329(a) proceeding. And fourth, it insists that
the Bankruptcy Court’s imposition of sanctions was an abuse
of discretion. None is persuasive.

-- 10 of 32 --

11
A. The Debtors Did Not Forfeit Their Arguments
As Spector Gadon would have it, we need not reach the
merits of this case because the Debtors forfeited6 their
arguments regarding both the Bankruptcy Court’s jurisdiction
and the applicability of the Seventh Amendment. We disagree.
In the ordinary course, parties must raise issues in the
trial court in order to preserve them for argument on appeal.
See In re Bestwall LLC, 47 F.4th 233, 242 (3d Cir. 2022). This
“general rule serves several important judicial interests,”
including “protecting litigants from unfair surprise” and
“preventing [trial] courts from being reversed on grounds that
were never urged or argued before them.” In re Diet Drugs
Prod. Liab. Litig., 706 F.3d 217, 226 (3d Cir. 2013) (quoting
Tri-M Grp., L.L.C. v. Sharp, 638 F.3d 406, 416 (3d Cir. 2011)).
But “preserving an argument ‘does not demand the incantation
of particular words; rather, it requires that the lower court be
fairly put on notice as to the substance of the issue.’” In re
Bestwall, 47 F.4th at 242 (quoting Nelson v. Adams USA, Inc.,
529 U.S. 460, 469 (2000)).
6 Despite its insistence that the Debtors “waived” these
arguments, Spector Gadon in reality advances a forfeiture
argument. We have plainly explained that “[f]orfeiture is the
failure to make the timely assertion of a right, an example of
which is an inadvertent failure to raise an argument,” while
“[w]aiver, in contrast, is the intentional relinquishment or
abandonment of a known right.” Barna v. Bd. of Sch. Dirs. of
Panther Valley Sch. Dist., 877 F.3d 136, 147 (3d Cir. 2017)
(cleaned up). Here, Spector Gadon argues that the Debtors
failed to raise arguments before the District Court, not that they
intentionally relinquished them.

-- 11 of 32 --

12
Here, while the Debtors did not precisely articulate
arguments concerning the Bankruptcy Court’s jurisdiction and
the Seventh Amendment, they did assert “the bankruptcy court
was correct when it disallowed all of [Spector Gadon]’s
bankruptcy fees for its failure to disclose that it was billing the
debtors pursuant to some other fee arrangement that was never
disclosed to the court.” D.C. Dkt. No. 8, at 18. By taking this
position, the Debtors necessarily asserted that the Bankruptcy
Court properly exercised jurisdiction and that the Seventh
Amendment did not entitle Spector Gadon to a jury trial. So
while the Debtors did not incant the particular words Spector
Gadon maintains they should have, their arguments were
enough to preserve these issues for our review. See In re
Bestwall, 47 F.4th at 242–43 (concluding appellant preserved
issue preclusion argument even though it “did not use the
words ‘issue preclusion’ or ‘collateral estoppel’” in the district
court). And as Spector Gadon raised the jurisdictional and
Seventh Amendment challenges before the District Court,
which then ruled on the latter, both it and the District Court
were plainly “on notice as to the substance of the issue[s].” Id.
at 242. Accordingly, we will reach the merits of the Debtors’
arguments.7
7 Even if the Debtors forfeited their arguments, we would
revive them. The preservation rule “is one of discretion rather
than jurisdiction, and it may be relaxed whenever the public
interest so warrants.” Barefoot Architect, Inc. v. Bunge, 632
F.3d 822, 834–35 (3d Cir. 2011) (cleaned up). We have been
“less reluctant to bar consideration of a forfeited pure question
of law,” Barna, 877 F.3d at 147, and “will reach ‘a pure
question of law even if not raised below where refusal to reach

-- 12 of 32 --

13
B. The Bankruptcy Court Had Core Jurisdiction
We next consider Spector Gadon’s challenge to the
Bankruptcy Court’s jurisdiction. Bankruptcy courts have
jurisdiction over four different categories of proceedings: (1)
cases under the Bankruptcy Code; (2) proceedings that “arise
under” the Bankruptcy Code; (3) proceedings that “arise in” a
bankruptcy case; and (4) proceedings “related to” a bankruptcy
case. See In re Resorts Int’l, Inc., 372 F.3d 154, 162 (3d Cir.
2004). The first three categories fall under bankruptcy courts’
“core” jurisdiction, see In re Combustion Eng’g, Inc., 391 F.3d
190, 225 (3d Cir. 2004), meaning bankruptcy courts can “hear
and determine” those proceedings without intervention from a
district court, 28 U.S.C. § 157(b)(1).
We have little difficulty concluding that this action fits
the second category because proceedings for the imposition of
sanctions for the failure to disclose attorneys’ fees under
§ 329(a) “arise under” the Bankruptcy Code. To determine
whether a proceeding “arises under” the Bankruptcy Code, we
ask whether it “is based on a right or remedy expressly
provided by the Bankruptcy Code.” In re Essar Steel Minn.,
LLC, 47 F.4th 193, 197 (3d Cir. 2022) (quoting In re Weiand
the issue would result in a miscarriage of justice or where the
issue’s resolution is of public importance,’” id. (quoting Bagot
v. Ashcroft, 398 F.3d 252, 256 (3d Cir. 2005)). Here, the
District Court’s decision, which stands to “unduly restrict
bankruptcy courts’ authority to enforce the protections of
section 329(a) in chapter 7 cases,” U.S. Trustee Amicus Br. 8,
and disrupt the administration of thousands of bankruptcy
cases, is undoubtedly a legal question of significant public
importance.

-- 13 of 32 --

14
Auto. Indus., 612 B.R. 824, 854 (Bankr. D. Del. 2020)).
Section 329(a) expressly provides for the disclosure at issue
here. Specifically, it sets forth an obligation on “[a]ny attorney
representing a debtor” to disclose “the compensation paid or
agreed to be paid” “in connection with the case” if it was “made
after one year before the date of the filing of the petition,” 11
U.S.C. § 329(a), to enable bankruptcy courts and parties in
interest to examine the reasonableness of the fees charged and,
if unreasonable, take appropriate action, see In re Stewart, 970
F.3d at 1258–59.
So the Bankruptcy Code provides both the right and
remedy, and proceedings initiated under § 329(a) therefore fall
within § 157(b)(2)’s non-exhaustive list of “core”
proceedings.8
C. The Seventh Amendment Does Not Apply
Although the Bankruptcy Court had “core” subject
matter jurisdiction to impose sanctions for violations of
§ 329(a), we still must determine whether the Seventh
Amendment entitles Spector Gadon to a jury trial. Cf. Stern v.
Marshall, 564 U.S. 462, 482 (2011). The Seventh Amendment
protects litigants’ right to a civil jury trial in cases where the
amount in controversy exceeds $20. U.S. Const. amend. VII.
8 Proceedings under § 329(a) also “arise in” a bankruptcy case.
A proceeding “arises in” a bankruptcy case when it “would not
exist outside of bankruptcy.” In re Essar Steel Minn., LLC, 47
F.4th 193, 197 (3d Cir. 2022). Because § 329(a) proceedings
require fees paid by a “debtor,” they necessarily occur only in
bankruptcy, thereby offering another basis for the Bankruptcy
Court’s jurisdiction.

-- 14 of 32 --

15
But that right only attaches to claims that are “legal in nature,”
not ones that are equitable. Granfinanciera, S.A. v. Nordberg,
492 U.S. 33, 53 (1989). So we must first determine the nature
of a claim under § 329(a).
Whether a claim is legal or equitable generally turns on
both “the cause of action and the remedy it provides.” SEC v.
Jarkesy, 603 U.S. 109, 123 (2024). But where a “cause[] of
action sound[s] in both law and equity,” the Supreme Court has
“concluded that the remedy [is] the ‘more important’
consideration.” Id. (quoting Tull v. United States, 481 U.S.
412, 421 (1987)). While monetary penalties generally indicate
that a claim is “legal,” remedies that merely “order a defendant
to return unjustly obtained funds” are equitable. Id. So where
a violation calls for a monetary remedy designed “solely to
‘restore the status quo,’” it does not trigger the Seventh
Amendment jury-trial right. Id. (quoting Tull, 481 U.S. at
422).
Under this rubric, violations of § 329(a) give rise to
equitable remedies, not legal ones. As our sister circuits have
recognized, permissible sanctions for violations of § 329(a)
include disgorgement of collected fees and cancellation of fee
agreements for bankruptcy-related services. See, e.g., In re
Dordevic, 62 F.4th at 342; In re Stewart, 970 F.3d at 1258; In
re Park-Helena Corp., 63 F.3d 877, 882 (9th Cir. 1995); In re
Prudhomme, 43 F.3d 1000, 1002–04 (5th Cir. 1995); see also
In re Futuronics Corp., 655 F.2d 463, 471 (2d Cir. 1981).
Indeed, the Bankruptcy Court imposed precisely those
sanctions here, ordering disgorgement of fees already collected

-- 15 of 32 --

16
by Spector Gadon and cancellation of its remaining fees.9
These remedies are “not analogous to a common-law cause of
action ordinarily decided in English law courts in the late 18th
century.” Hale v. U.S. Tr., 509 F.3d 1139, 1147 (9th Cir.
2007). Rather, they are designed to restore the status quo and
thus are quintessentially equitable. See Liu v. SEC, 591 U.S.
71, 80 (2020); 12A C.J.S. Cancellation of Instruments § 9
(West 2024). As such, claims under § 329(a) and Bankruptcy
Rule 2016(b), like claims under their predecessor provision in
the 1898 Bankruptcy Act, do “not deprive parties of rights
secured under the 7th Amendment of the Constitution.” In re
Wood, 210 U.S. 246, 258 (1908).
Our treatment of sanctions in other contexts confirms
this result. The Supreme Court has long held that the power to
sanction conduct—either through contempt or otherwise—“is
inherent in all courts.”10 Chambers v. NASCO, Inc., 501 U.S.
32, 44 (1991) (quoting Ex parte Robinson, 86 U.S. (19 Wall.)
505, 510 (1874)). And both the Supreme Court and our Court
9 We do not foreclose the possibility that an unusual case may
warrant additional sanctions. See, e.g., In re Whitley, 737 F.3d
980, 988 (5th Cir. 2013) (“The bankruptcy court has authority
to impose disciplinary sanctions on attorneys beyond the return
of compensation.”). In the ordinary course, however, total or
partial disgorgement or cancellation of fees serve as
appropriate remedies for violations of § 329(a) and Bankruptcy
Rule 2016(b).
10 We have also held that “[a]mong the implied and ‘incidental’
powers of a federal court is the power ‘to discipline attorneys
who appear before it.’” Fellheimer, Eichen & Braverman,
P.C. v. Charter Techs., Inc., 57 F.3d 1215, 1224 (3d Cir. 1995)
(quoting Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991)).

-- 16 of 32 --

17
have recognized that such civil sanctions do not trigger a
party’s Seventh Amendment right to a jury trial. See Shillitani
v. United States, 384 U.S. 364, 370–71 (1966); United States
v. Harris, 582 F.3d 512, 514 (3d Cir. 2009).
Spector Gadon objects that the Bankruptcy Court’s
sanction, as a practical matter, will preclude it from proceeding
to trial in the Collection Action, rendering its Seventh
Amendment right illusory. But the Supreme Court has long
held that “the right to a jury trial does not negate the issue-
preclusive effect of a judgment, even if that judgment was
entered by a juryless tribunal.” B & B Hardware, Inc. v. Hargis
Indus., Inc., 575 U.S. 138, 150 (2015) (citing Parklane Hosiery
Co., Inc. v. Shore, 439 U.S. 322, 337 (1979)). So in evaluating
whether the Seventh Amendment entitles a party to a jury trial
in one proceeding, we do not consider the potential preclusive
effect of that proceeding on another. Instead, we consider only
the instant proceeding and the nature of the claim raised in it.
Here, we have a § 329(a) proceeding and a claim that is
equitable,11 so the District Court erred by concluding that
Spector Gadon’s right to a jury trial in the Collection Action
extended to the § 329(a) proceeding in the Bankruptcy Court.12
11 Of course, Spector Gadon is entitled to contest the
application of issue preclusion in the Collection Action. We
note only that “[t]he normal rules of res judicata and collateral
estoppel apply to the decisions of bankruptcy courts.” Katchen
v. Landy, 382 U.S. 323, 334 (1966).
12 Because sanctions for violating § 329(a) and Bankruptcy
Rule 2016(b) do not implicate the Seventh Amendment, we do
not need to consider whether the “public rights” exception
applies. See SEC v. Jarkesy, 603 U.S. 109, 120 (2024).

-- 17 of 32 --

18
D. Spector Gadon’s Remaining Arguments Fail
Spector Gadon’s last argument in favor of affirming the
District Court’s decision is that the equities weigh in its favor.
Specifically, it contends (1) that it did not violate § 329(a) or
Bankruptcy Rule 2016(b), either in its representations on its
original Rule 2016(b) disclosure form or in its subsequent
failure to disclose the Letter Agreement to the Bankruptcy
Court; (2) that even if it did violate its obligations, the
Bankruptcy Court erred by failing to hold an evidentiary
hearing; and (3) that the Bankruptcy Court improperly failed
to consider the Debtors’ own misconduct before ordering
disgorgement and cancellation of Spector Gadon’s fees. None
of these arguments withstands scrutiny.
First, Spector Gadon did violate § 329(a) and
Bankruptcy Rule 2016(b)—at a minimum because it was
required to, and did not, disclose the Letter Agreement.13
13 While the District Court did not reach the issue of whether
the Bankruptcy Court abused its discretion by sanctioning
Spector Gadon, it noted in passing that sanctions for violating
§ 329(a) and Bankruptcy Rule 2016(b) “almost always
follow[] an attorney’s application for fees filed under those
very same provisions.” In re Aquilino, 660 B.R. 197, 206 n.4
(D.N.J. 2024). In support of that assertion, it cited a
nonprecedential decision from this Court, In re 38-36
Greenville Ave LLC, No. 21-2164, 2022 WL 1153123 (3d Cir.
Apr. 19, 2022). Aside from not constituting binding precedent,
see 3d Cir. I.O.P. 5.3, 5.7, that case (a Chapter 11 bankruptcy,
no less) does not stand for the proposition that an application
for fees to be paid from the bankruptcy estate is a necessary

-- 18 of 32 --

19
As a threshold matter, the firm urges that its original
Bankruptcy Rule 2016(b) disclosure form was accurate when
filed because under section 6, when asked to specify the legal
services the firm “ha[d] agreed to render” “[i]n return for the
above-disclosed fee,” App. 77, it left untouched the pre-printed
list of services in subsections 6(a)–(d) and, as “[o]ther
provisions as needed” in subsection 6(e), typed in: “[p]re-
bankruptcy planning, preparation of [p]etition and [s]chedules,
[and] attendance at [the §] 341(a) hearing,” id. As represented
by the chair of the firm’s bankruptcy practice group, Leslie
Baskin, the firm’s regular practice was to “circle or check
which of the listed subcategories of services—(a) through
(e)—will apply to [its] representation of the debtors,” and to
assume the Bankruptcy Court would understand that
“[s]ervices not mentioned [in subsection (e)]. . . are excluded
from the agreement as a result.” Answering Br. 5. Also based
on that assumption, the firm omitted any response to section
7’s inquiry as to any legal services that, “[b]y agreement with
the debtor(s), the above-disclosed fee does not include.” App.
condition to trigger sanctions for violating § 329(a) or
Bankruptcy Rule 2016(b). And in light of the Code’s plain
language requiring disclosure of all fees and payments made
“in connection with” the bankruptcy case, 11 U.S.C. § 329(a),
the District Court erred by concluding that payment from estate
assets was required for those disclosure obligations to apply,
see In re Walters, 868 F.2d 665, 668 (4th Cir. 1989) (“[A]ny
payment made to an attorney for representing a debtor in
connection with a bankruptcy proceeding is reviewable by the
bankruptcy court notwithstanding the source of payment.”); 3
Collier on Bankruptcy ¶ 329.03[1] (16th ed. 2024) (“The [fee
disclosure] statement must be filed whether or not the attorney
intends to apply for compensation under the Code.”).

-- 19 of 32 --

20
77. We appreciate that Bankruptcy Form 203014 is not a model
of clarity and that Spector Gadon may have believed, in good
faith, that its initial $3,500 fee covered only those services
listed in subsection 6(e).15 So we will assume, for now, that
the firm fulfilled its disclosure obligation in its initial
statement.16
14 We attach Bankruptcy Form 2030 as Appendix B.
15 At the same time, other evidence in the record suggests the
initial agreement may not have been so limited. Ms. Baskin,
the chair of Spector Gadon’s bankruptcy practice, affirmed in
her declaration that, prior to signing the Letter Agreement,
Spector Gadon “performed legal services for the Aquilinos,
including, but not limited to: preparing the bankruptcy petition
and required legal documents; reviewing relevant financial
documents; making necessary court appearances; and
communicating with the [Bankruptcy] Court, Chapter 7
Trustee, creditors, and counsel for all parties.” App. 314. This
non-exhaustive list of services would seem to exceed the
“[p]re-bankruptcy planning, preparation of [p]etition and
[s]chedules, [and] attendance at [the §] 341(a) hearing” to
which Spector Gadon maintains its representation was limited
under its pre-petition agreement with the Debtors. App. 77.
Regardless, for present purposes, we will give the firm the
benefit of the doubt as to its initial certification.
16 In view of the confusion engendered by the form in this case,
the Director of the Administrative Office of the United States
Courts may wish to consider whether revisions are warranted.
The form used by Spector Gadon here is materially identical to
Bankruptcy Form 2030, save for an additional item appearing
at section 2, thereby setting off the forms’ numeration by one.
Aside from this discrepancy, the two forms are identical in

-- 20 of 32 --

21
Even so, Spector Gadon’s subsequent failure to update
that statement and disclose the Letter Agreement
unequivocally violated its disclosure obligation. The firm
defends that no update was necessary because the firm “never
filed any proof of claim nor any application for fees” and “was
only seeking to collect . . . from non-bankruptcy assets.”
Answering Br. 17. But that is beside the point: Its disclosure
obligation extended to all payments and fee agreements for
services rendered “in connection with” the bankruptcy case,
“whether or not [it] applie[d] for compensation” from the
estate. 11 U.S.C. § 329(a). And it is undisputed that (1)
their respective sections most relevant to this case. Section 5
of Bankruptcy Form 2030 (section 6 of Spector Gadon’s form)
states, “In return for the above-disclosed fee, I have agreed to
render legal service for all aspects of the bankruptcy case,” and
then lists subcategories of common bankruptcy services at (a)–
(d), followed by “[o]ther provisions as needed” at (e). That
could lead debtors’ counsel completing the form to believe that
a notation at subsection (e) or a marking on some, but not all,
of the other subsections would effectively communicate that
the remainder were excluded from the representation and that
no additional notations were needed in section 6, as Spector
Gadon seemingly believed here. We acknowledge that the use
of this form is not mandatory, see Fed. R. Bankr. P. 9009(b),
but it is created “for the benefit of bankruptcy case
participants,” Permitted Changes to Official Bankruptcy
Forms, U.S. Courts, https://www.uscourts.gov/forms-
rules/about-rulemaking-process/permitted-changes-official-
bankruptcy-forms (last visited Apr. 22, 2025), and well-
intentioned attorneys reasonably look to it for guidance.
Clarification of sections 5 and 6 of the standard form could
avoid such confusion by debtors’ attorneys in the future.

-- 21 of 32 --

22
Spector Gadon provided post-petition services “in connection
with” the Debtors’ bankruptcy case, Oral Arg. Tr. 27:21–22,
including valuing estate property, correcting and filing
amended schedules, and defending the Debtors in related
litigation, and (2) the Debtors agreed to pay Spector Gadon for
these services by signing the Letter Agreement on August 23,
2021, i.e., “after one year before the date of the filing of the
petition,” 11 U.S.C. § 329(a). Thus, the Letter Agreement fell
within the four corners of § 329(a), and Spector Gadon had
fourteen days under Bankruptcy Rule 2016(b) to file a
supplemental disclosure. Having failed to do so, it violated
§ 329(a) and Bankruptcy Rule 2016(b).17
Second, in an argument advanced for the first time at
oral argument, Spector Gadon asserts that the Bankruptcy
17 Crediting Spector Gadon’s argument would mean the
bankruptcy disclosure rules could never be enforced against
debtors’ attorneys in Chapter 7 cases because their fees cannot
be paid from the estate. See Lamie, 540 U.S. at 538–39. We
reject such a sweeping proposition. We also reject the
proposition that “a Chapter 7 debtor’s attorney is not required
to disclose or otherwise supplement its form to include post-
petition legal services provided to the debtor because those fees
are simply additional services not covered by the initial
disclosure form.” Answering Br. 24. The Bankruptcy Code
and Rules say precisely the opposite: Counsel is statutorily
obligated to disclose all fees and payments made for services
in connection with the bankruptcy case, 11 U.S.C. § 329(a),
and to do so on an ongoing basis, Fed. R. Bankr. P. 2016(b).
In short, the universe of payments and agreements that must be
disclosed is not limited to those that appear on an attorney’s
initial Bankruptcy Rule 2016(b) statement.

-- 22 of 32 --

23
Court abused its discretion by not holding an evidentiary
hearing before entering its sanctions order. But this assertion
borders on the misleading. The Bankruptcy Court did hold a
hearing on the Debtors’ motion, and it accepted the submission
of evidence, including a certified declaration from Ms. Baskin.
In fact, the same attorney who appeared at oral argument and
made this assertion before us appeared before the Bankruptcy
Court at that hearing. He represented to the Bankruptcy Court
that Spector Gadon would “rely, primarily, on [its] motion”
submitted in response to the Debtors’. App. 1278. Spector
Gadon did not request an evidentiary hearing, either,18 and it
has not provided any basis to conclude that it was precluded
from building a record or presenting evidence it thought
probative to its compliance with § 329(a) and Bankruptcy Rule
2016(b).
18 While Bankruptcy Rule 2017(a) requires “notice and a
hearing” before reviewing a debtor’s attorney’s fees for
excessiveness, it does not mandate an evidentiary hearing, and
the decision to hold an evidentiary hearing in such
circumstances lies within the sound discretion of the
bankruptcy court. See McDowell v. Philadelphia Hous. Auth.
(PHA), 423 F.3d 233, 238 (3d Cir. 2005). In any event, the
Bankruptcy Court held a hearing and accepted the only
“evidence” Spector Gadon offered. So, particularly in light of
Spector Gadon’s failure to request an “evidentiary hearing”
and its indication that it would rely on its papers, we can hardly
conclude the Bankruptcy Court here abused its discretion. See
11 U.S.C. § 102(1)(B) (stating that the phrase “after notice and
a hearing” “authorizes an act without an actual hearing if such
notice is given properly and if—(i) such a hearing is not
requested timely by a party in interest”).

-- 23 of 32 --

24
To the extent Spector Gadon asserts that material
factual disputes exist that would have prevented the
Bankruptcy Court from ruling on the Debtors’ motion, it is
mistaken. All agree that (1) the Letter Agreement was entered
after one year before the petition date; (2) the Letter Agreement
was for services rendered “in connection with” the bankruptcy
case; and (3) Spector Gadon did not disclose the Letter
Agreement to the Bankruptcy Court. Those facts suffice to
conclude Spector Gadon violated § 329(a) and Bankruptcy
Rule 2016(b).
Nonetheless, Spector Gadon insists that its attorneys’
intentions are relevant to the Bankruptcy Court’s inquiry.
Specifically, it touts that “the Chair of [Spector Gadon]’s
Bankruptcy and Creditors’ Rights Practice Group,” Leslie
Baskin, “has always filled out her [Bankruptcy Rule 2016(b)]
disclosure forms” as was done here, “and she has never had
any issues with this method.” Answering Br. 5. But in light of
the undisputed facts, we fail to see how this practice bears on
the legal question of whether Spector Gadon fulfilled its
disclosure obligation. And pleading (questionable) past
practice neither displaces the Code’s requirements nor
establishes compliance with those requirements on this
occasion.
Finally, Spector Gadon maintains that the Bankruptcy
Court failed to consider the Debtors’ malfeasance, rendering
its order of disgorgement and cancellation of the Letter
Agreement unreasonable. But the Bankruptcy Court was well
aware of the Debtors’ misconduct, as even Spector Gadon’s
counsel conceded at oral argument. And the Bankruptcy Court
helpfully issued a detailed opinion and explained in compelling
terms its reasons for nonetheless imposing these sanctions,

-- 24 of 32 --

25
including that Spector Gadon failed to disclose and sought to
collect fees for “work done immediately after the Petition
Date”; “even if the services inserted in paragraph 6.e. [of its
disclosure] were the only services included in the fee, they
were billed and included in the amount [Spector Gadon] seeks
to recover in the [Collection Action]”; and Spector Gadon’s
practice of filling out Bankruptcy Rule 2016(b) disclosure
forms did not displace its duty to accurately disclose its fee
agreement to the Bankruptcy Court. In re Aquilino, 2023 WL
2191494, at *6.
In these circumstances, the Bankruptcy Court’s
sanctions order was not an abuse of discretion. Courts of
Appeals that have addressed the issue have regularly held that
full disgorgement and cancellation of fee agreements can be an
appropriate sanction for violating the Code’s disclosure
requirements.19 See, e.g., In re Dordevic, 62 F.4th at 343; In
re Stewart, 970 F.3d at 1264; In re Lewis, 113 F.3d 1040, 1045
(9th Cir. 1997); In re Downs, 103 F.3d 472, 478 (6th Cir.
1996); In re Park-Helena Corp., 63 F.3d at 882; In re
Futuronics Corp., 655 F.2d at 471. And with that much, we
19 Some courts have held that “[e]ven a negligent or inadvertent
failure to disclose fully relevant information may result in a
denial of all requested fees.” In re Park-Helena Corp., 63 F.3d
877, 882 (9th Cir. 1995). We need not decide whether
inadvertent nondisclosure warrants such a sanction because,
here, Spector Gadon’s failure was willful. See Oral Arg. Tr.
40:25–41:3 (explaining that Spector Gadon purposefully did
not disclose the Letter Agreement because “we felt that it was
not within the scope of the original services that were
contracted with the Aquilinos and that it didn’t involve any
assets of the estate”).

-- 25 of 32 --

26
agree—total disgorgement and cancellation of fee agreements
can be a permissible sanction depending on the facts of the
case.
But because bankruptcy courts “are equitable tribunals
that apply equitable principles in the administration of
bankruptcy proceedings,” Off. Comm. of Unsecured Creditors
of Cybergenics Corp. ex rel. Cybergenics Corp. v. Chinery,
330 F.3d 548, 567 (3d Cir. 2003) (en banc), they must take
account of all relevant circumstances in determining the
appropriate sanction for violating § 329(a) and Bankruptcy
Rule 2016(b). After all, “[e]quity abhors a windfall.” In re
Millennium Lab Holdings II, LLC, 945 F.3d 126, 143 (3d Cir.
2019) (quoting US Airways, Inc. v. McCutchen, 663 F.3d 671,
679 (3d Cir. 2011)), abrogated on other grounds by
Harrington v. Purdue Pharma, L.P., 603 U.S. 204 (2024). So
when a sanction would work to the benefit of a party who itself
has committed inequitable conduct, a bankruptcy court must
consider that fact as well.
As Spector Gadon included in its opposition to the
Debtors’ motion and conceded at oral argument, the
Bankruptcy Court was aware of and considered the Debtors’
misconduct that necessitated Spector Gadon’s post-petition
services. Nonetheless, it determined that total disgorgement
and cancellation of the Letter Agreement was warranted—a
fortuitous result for the Debtors.20 Because the Bankruptcy
20 To be sure, debtors who conceal assets or otherwise fail to
fulfill their obligations under the Bankruptcy Code may
themselves be subject to various sanctions. See, e.g., 11 U.S.C.
§ 727(a); 18 U.S.C. § 152. Indeed, here, it appears the Debtors

-- 26 of 32 --

27
Court considered all relevant factors, including the balance of
equities, before sanctioning Spector Gadon, its decision was
not an abuse of discretion.
IV. Conclusion
For the foregoing reasons, we will reverse the District
Court’s judgment and will reinstate that of the Bankruptcy
Court.
will receive less than a full discharge due to their conduct. See
Bankr. Ct. Dkt. 379, at 3 (“The Debtors’ chapter 7 discharge is
waived, and the Debtors shall not receive a discharge under 11
U.S.C. § 727, for all debts incurred up to and including April
16, 2020.”).

-- 27 of 32 --

APPENDIX A

-- 28 of 32 --

-- 29 of 32 --

APPENDIX B

-- 30 of 32 --

B2030 (Form 2030) (12/15)
United States Bankruptcy Court
_______________ District Of _______________
In re
Case No. ___________________
Debtor Chapter ____________________
DISCLOSURE OF COMPENSATION OF ATTORNEY FOR DEBTOR
1. Pursuant to 11 U .S.C. § 329(a) and Fed. Bankr. P. 2016(b), I certify that I am the attorney for the above
named debtor(s) and that compensation paid to me within one year before the filing of the petition in
bankruptcy, or agreed to be paid to me, for services rendered or to be rendered on behalf of the debtor(s) in
contemplation of or in connection with the bankruptcy case is as follows:
For legal services, I have agreed to accept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $______________
Prior to the filing of this statement I have received . . . . . . . . . . . . . . . . . . . . . . . . $______________
Balance Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $______________
2. The source of the compensation paid to me was:
Debtor Other (specify)
3. The source of compensation to be paid to me is:
Debtor Other (specify)
4. I have not agreed to share the above-disclosed compensation with any other person unless they are
members and associates of my law firm.
I have agreed to share the above-disclosed compensation with a other person or persons who are not
members or associates of my law firm. A copy of the agreement, together with a list of the names of the
people sharing in the compensation, is attached.
5. In return for the above-disclosed fee, I have agreed to render legal service for all aspects of the bankruptcy
case, including:
a. Analysis of the debtor' s financial situation, and rendering advice to the debtor in determining whether to
file a petition in bankruptcy;
b. Preparation and filing of any petition, schedules, statements of affairs and plan which may be required;
c. Representation of the debtor at the meeting of creditors and confirmation hearing, and any adjourned
hearings thereof;

-- 31 of 32 --

B2030 (Form 2030) (12/15)
d. Representation of the debtor in adversary proceedings and other contested bankruptcy matters;
e. [Other provisions as needed]
6. By agreement with the debtor(s), the above-disclosed fee does not include the following services:
CERTIFICATION
I certify that the foregoing is a complete statement of any agreement or arrangement for payment to
me for representation of the debtor(s) in this bankruptcy proceeding.
______________________
Date Signature of Attorney
Name of law firm

-- 32 of 32 --