good morning your honor can i flee for virginia properties appellant we're here today to review one of the largest sanctions award in the southern district and it is our position that this award is not consistent with the law of the circuit and certainly not consistent with the factual record i would like to begin by pointing out a few key themes that were the underpinnings of the sanctions or that we believe are contrary to the factual record and show that this was in fact an abuse of discretion by the district court and then after that i would like to discuss some of the law clickable of this case including the supreme court's recent decision in goodyear and how to apply here was this was is that decision made before goodyear was handed down yes this court his hell that while a certain amount of deference is indeed accorded the district court but with respect to its inherent authority to issue sanctions this court must also ensure that such decisions are made with restraint and discretion side as well as a nonparty since the inception the case a punitive sanction of seventy five thousand dollars payable to the district court and in addition to that dismissal with prejudice of all of the plaintiffs claims the the one of the key themes that appears to have honor underlie the district court's order is the the district court's belief that virginia properties was responsible for quote apparent forgeries of document produced in this case and a forgery is a it was the forgery were all the documents the two as some that's prepared by the engineer that is correct your honor and that is precisely were a point that there is absolutely no factual record is no evidence to support in the record that any of the documents produced by virginia properties in this case were forgeries as that is estimate was not turned over timely is that correct the answer your question is that the and i was i will get to this but the answer is that for the documents that were in existence as of the commencement of this litigation they were all turned over by virginia properties to its trial counsel on a timely basis and trial counsel was responsible for making the production except this one point m which was never turned over to the nine point memo was not found in the files of virginia properties and so there is no evidence that virginia properties withheld it or did anything they simply were not turned over in search of the files that it is testimony was a it or not is the thought he sent it wasn't that's correct there's no there's there's no dispute that mr yen created both versions of the document and he's not sure whether he said it or point i'm sorry judge but it's a four point memo that that judge  right it appears so but but part of our point and it's noteworthy that team mobile and its priest does not defend the judge's characterization of any of these documents as quote apparent forgeries because they are also aware that it can't be the case what the judge appears to have determined were quote forgeries or instances in which a document is prepared in several different versions for several different purposes and the testimony is quite clear in this case that given the nature of the repairs that were being done on the building virginia properties was aware from the beginning that there were going to be issues about which of the repairs are properly reimbursable by t mobile because they were caused by the collapse of the antenna on virginia properties damages as were only partially due to be defended in the case doings and all of those things are you arguing that there isn't enough to find that your client did things which were wrong or are you arguing that given what was found to be wrong the sanctions were disproportionate to it i'd like to know which it is because you're kind of go in back and forth so that i may be clear we're arguing the first argument your honor but there is not enough evidence in the record to suggest that virginia properties was doing anything deceptive anything on bad faith article argument to brought in be evidence of what you put in your complaint to be amount of money bit was via as against the total damages i think that's a you know i think that's a remarkable argument to make at the district court could not have found within its discretion that your client did uptake of a law which was which was wrong the question of whether the sanctions and specifically under goodyear whether all of the attorney's fees were a question of a seventy five thousand dollars fine that's a question which you know might be discussed the question of whether the dismissal of a whole suit when part of a suit seemed to have merit again those are things which might be talked about that the notion that you're the district judge couldn't find your client did a heck of a lot that was wrong i found that remarkable or your honor i want to address all of those issues if i have time to do so but it is absolutely a core and a painting of our position that the district court has completely misconstrued the record in this case and while as i said it is afforded some discretion it doesn't need to match up the record simply producing two versions of the document one of which has all of the expenses and another one has just the expenses trouble pretty mobile does not make it a forgery in addition to that a matter of fact if you are going to try to  mislead the other side you just do one and say here it is pay for all the damages right don't the only reason you would do two is to distinguish between damage that was caused by t mobile in damage that wasn't caused by that that that is the case and that's exactly what happened and moreover all of these versions multiple versions were turned over by virginia properties to all of its try to council and to the extent that there are any problems or delays in production those can only be held to council they cannot be a agreement for the original construction and there was an agreement that was created and backdated to the original later this construction because the document was not in existence in the form however there is no evidence that anything in the document was inappropriate or incorrect it was simply in an attempt to memorialize an agreement that had taken place earlier when the construction commenced let me ask you to address what i think is is at least from my view the most troubling email is certainly not you know anyone's favorite e mail it also does not prove that mr spring was instructing mr cooler to lie to deceive anybody there was obviously a very heated discussion and i think that the emotions probably got the better of him but again nothing in nothing in the record points to the notion that what the court has concluded was that the true damages in his own opinion were only t was surprisingly similar yes and the reason is because those two documents were prepared for solve a sort of an apples to oranges comparison the document that is sent the city in the state looking for tax abatements and for instabili increases allows them to put in subject matters that are not related to the tivo actions such as there is a boiler that went into there at the same time there are other kinds of things for which one cannot recover such as scaffolding which were omitted the two figures are exactly the say or just about exactly well and i think it speaks to the fact that that would be an entirely appropriate cross examination issue at a trial to a trier of fact but given the stakes at the sanctions stage to completely dismiss all of the claims and assess these kinds of sanctions plus the seventy five punitive sanction i think is not defensible by this record and the two numbers were not exactly the same right they were there were some things that were added in and other things that were subtracted that were roughly the same firm for t mobile robert spring the managing member of plaintiff virginia properties owns a bunch of buildings in new york city including the one issue in this case which is a six story apartment building on virginia avenue in the bronx built almost a century ago it's not exactly a luxury building in the last seven years alone its tenants have lodged more than seventy complaints with the city willing to mold especially this and other unsanitary conditions and fact based on official new york city data the building has received the worst possible rating by the city or an f in two thousand and twelve plaintiff decided to conduct extensive repairs to the roof and facade on all sides of the building the cost of long time around and when they put out they say it takes about three hundred fifty square feet it's in the southeast corner of the roof if you look at the complaints exhibit white the complaint which is on the record as joint a get all of the attorney's fees if we decide that there's a chance or proper in the first place because it may be that there would have been no attorney's fees because we would have been a settlement because you would have offered to hellerstein made that precise finding and the site for that is one second your honor the cite for his finding on that is s p a three he said and he made a finding that at the bigger case he actually presided over that yes but he made a finding of that story under a new just standing though the law which was before the supreme court said we're a book for  that is so he will simply go back and make that deal but i understand you are but with respect that argument was made the good your argument was made by the lower court by this law firm we cited it in our twenty ha later in the twenty  already caused some damage is that fair i think when the report was made by mr spring right before he filed the case t mobile did not deny that it is certainly possible that it's quick it could have caused damage if you mobile does and would deny  be done based on the t mobile work which was part of the six hundred ninety two thousand dollars damage questions are right now they're not damage questions because this is not a complete this is not a case and which someone makes a complaint in just says you damaged me in an amount to be determined by an expert these documents with six hundred ninety two thousand dollars were attached to the complaint they were part of they were if you look at exhibit j attached to the complainant maple thirteen it has nothing about the repairs that we know that were done about brick pointing or waterproofing it's not on the document and not on that not only that your honor this client was subject to rule twenty six twenty eight twenty six disclosures and under twenty six a all they relied on were the documents minutes their complaint through you might be right your honor if someone said and then day on them in a month to be determined by experts but he came in on day one and said that all of this work was attributed to the t mobile he did not he left off the documents the work that was actually done that we showed in our complaint was the actual cost so fraud permeated this case from day one and i agree these sanctions were high but in a case in which a plaintiff submit  succumb plaint in which documents are fraudulent from day one and what docu what documents were fraudulent exhibit why to the complaint which is what eight nine zero nine what is it what is it that is the the drawing that's supposed to show the work that was just into the building that's completely contradicted by the detailed architectural drawings that were later isn't discovery the four point reports of mr yen attached to the complaint how is that fraudulent because it purports any person reading this document would is j a sixty seven which has nothing which comes to six hundred ninety two thousand dollars and you're saying those documents are fraudulent because they're overreaching they're asking for more then the actual repairs related to the t mobile were they have nothing to do with the repairs are we know what the six hundred ninety two thousand dollars cost because we have later documents includes brick pointing waterproofing and little work and they're not on these documents but there are some damage attributable to t mobile isn't there presumably there is your honor but when someone files a complaint and seeks to recover six hundred ninety two thousand dollars and attaches documents with a six hundred ninety two thousand dollar figure that does not that consciously o actual work that was done and that is a six ounce not docked let me ask you why even given what you are saying wouldn't be appropriate propre it sanctions have been the legal fees that were rendered necessary by this which might be via whole amount if a settlement offer had been made was made and maybe the an amount if it i understand that but i'm talking about the sensible set of sanctions why isn't a sensible set of sanctions say you have made viz people spend a lot of money on  fees and vet you must give back and we'll figure out what that is whether it's a whole or not now under a good year or whatever and maybe you already did that but that a you've taken mccourt's time assuming with that's what the seventy five thousand dollars is rather than a fine or if it is a fine what protections there are for it but why does that cause  my answer to that your honor is that we all work day to day in a court system all of us in this room that take the integrity of statements made in court documents very seriously and when someone does what this plaintiff did in this case and comes in and files a document permeated with fraud and then keeps it hidden for two years and then submit stock humans to the city in the state to get a windfall to get it he got a rent increase from his tenants that that exacerbate the fraud the district court was well within its inherent authority to say no can do in fancy legal terms you   that goes to the damages the things you did but why with respect to your mo the person that you are responsible should that disappear why should you get a windfall because you are getting a windfall because you don't have to pay for the damages you did because of that that's you know that's why i'm trying  am more skeptical than perhaps some of my colleagues about whether what they did was sufficiently fraudulent or wrong but but in v n always come down to know what is a sensible an abuse of the judicial process of the like that happens here i don't think that either the supreme court or this court's cases say that and while i agree that the sanction here was severe the conduct that it sanctions was severe and it doesn't this amount to a windfall for t mobile since they had met that there was damage to the roof t mobile is not paying pursuant to this conduct for the damage of any damage for the roof that was not caused but the plaintiff also got a windfall judge pooler because the plaintiff apply for a running crease for six hundred and ninety two thousand dollars to the city and got that right increase approved so over the next four years his tenants will actually be paying that amount anyway so you're right there's questions of a windfall here but i think you have to look at both sides of the equation about windfalls which is one of the issues that very disturbed the district court below and i ask about one of the things that concerns me an awful lot about what judge hellerstein did is this is this four point memo that he says was clearly forged and that mr spring added things to it mr yen testified four point report and it was all his language what's the basis for finding that that was for before i did i think the fighting is such that it's fraudulent and the reason it's fraudulent as the way it was portrayed in this case is that mr young testified under oath that in the four point report only the first in this excuse me in the nine point report numbers one through seven had absolutely nothing to do with the mobile right yet only the four point report which purports to describe really only one thing that overlaps it has to do with tivo but was attached to the complaint but then when you try the numbers throughout the case and judge and this was very important to judge hellerstein when you tie the numbers to the case for the actions that down in the nine report those tie out to six why wasn't it submitted in twenty six eight disclosures in this case which it was not he said he gave it to his attorney does mr young says he believes that mr spring saw it when mr spring was shown it in his affidavit he says yes i believe i've seen this before mr spring ever had that document right mr young says he thinks you sent it to him mr spring didn't have it is fine mr spring said he saw it ok and the document is material to issue on the that work ok and when the attorneys and this was truly the extraordinary thing about this case in defense what does mr spring say he says it's all my attorney's fault but his attorney is also that mr spring a lie and mr carney said he lied his second attorney said he lied and his third attorney mr to bellow and made it that he lied in backdating the rent increase application and that's extra i agree that these things are extraordinary but that is extraordinary they said that as part of a proceeding designed to determine whether they would be responsible for this right i'm sorry your honor i didn't understand the question of when they submitted those affidavits the judge was looking at them as possibly being responsible for what he song is discovery abuse and second attorney mr markowitz mr spring in order to defend himself said i to these attorneys told me that the rent increase and the tax abatement documents were not relevant that was his testimony in his affidavit and then they were butted that by two people saying two attorneys he never said that i was never in a room with him or we said that and to say that would be nonsensical the judge never had to hear him there right there was the hearing that he was going to have and then he said we're not going there let me let me talk about that for a second because with respect to the hearing i would respectfully submit that it's very important and crucial that mr spring did not submit an affidavit again after judge hellerstein accused and saw and his attorney admitted that he backdated the rent increase applications had he testified before judge hellerstein i'm not sitting in their shoes but he would have had a very serious decision to make about whether or not to invoke his fifth amendment rights and he didn't not only did he not testify but he didn't even submit a second  had his son submitted so i believe it's not that they asked to meet for him to testify he said at the time when judge toler symbiote up that he had a back problem and he wasn't sure his attorney wasn't sure whether it's going to show up and then he never put anything else and i never asked to testify and i would respectfully submit that we can tell why the e mail to his attorney said he would show up for the deposition in the attorney was the one who represented that he would not show i'm talking about the hearing not about the deposition or at the hearing there was discussion before judge hellerstein about his back problem judge hellerstein said i believe this man lied or if he's going to the fraud the city and charges tenants more money he's going to defraud other people and then he didn't put in another affidavit and he didn't show up to testify i would say that there's a very good reason why that happened at me returned a moment to the saw as to what you said if we do this aren't we say that you can never dismiss a case we're there is no question what if about the validity of that amount of damage you see what bothers me about this case that you know if this were a question of whether your client was was not at all and then there was a dismissal and then you can say well you know you never know and bs people who are frauds or so what makes this case rather remarkable is that no you do know indeed you do know that about three hundred thousand or you responsibility that's what i would just it would seem to me that this is distinguishable but what i would say on that judge caliber easiest to continue through the process and to actually have some kind of a factual determination on the merits of the damages attributable to the cellphone equipment with this pervasive degree of fraud in the case and fraud in terms of the behavior of the litigants what itself be injurious to and not necessarily injurious to the integrity of the judicial system  understand that that's a different argument from you were making earlier that if we decide that this is improper we are say that  you can never dismiss and i agree with that yes i agree with that you're right i would say that here with that the pervasive degree of the fraud of to require judge hellerstein to have to conduct a trial for someone who's already so clearly offended  social system lied and statements to the city lied in terms of the initial documents that were submitted in connection to the damage of this case in my view your honor and i am not sit where you are that would you great damage to the judicial system this is a good place to stop thank you and we'll hear from  t the appellant made no argument as to the order granting fees in favor of can be so it's our position that it's not properly before the court if the court is to me is it is inclined to consider it we join in the arguments of t mobile and it depends solely on your friends on the other side to point out that the arguments that you make in your brief as to why you might be entitled to sanctions otherwise other than for the issues with respect to this appeal were not considered by judge hellerstein the basis of our response to their appeal your honor is that it was based on a fraud on the court that it was pervasive as counsel said throughout the entirety of litigation and the judge hellish and determine that the entire case was far gone from its inception the the background that we provided for the court was merely to underscore the bad faith actions of the council in bringing k and be second circuit directly on point with respect to the but for causation standard that is now embodied in goodyear and so therefore when the u s supreme court issues new law on something that is directly germane to the issue it seems to me that the only minimally appropriate result for this court is to vacate the order and re mand to you or you mean us i apologize of course with respect  the the minimally appropriate relief in this instance is to vacate the district court's order and re man for further consideration in accordance with the your decision i agree with your honor that  it is extreme in this case to award all of the attorneys fees that are since the commencement of the case to the to the other side and in order to qualify under the good year the district court sanctioned assuming that it was incredible adult course but assuming that that that they claim that the district court in fact still found them not so sure but i suppose it would know i don't believe that the discord has clearly made that finding your honor and i suppose it is true that the district court could do that i also do not believe that it is clearly the case in the record that we can be sure that the case would in fact have settled before the complaint was filed i think there is some dispute about that there was no hearing on damages right there's no there's no testimony by x words and the amount of damages that was caused by t mobile that is absolutely correct the fact the expert discovery has not even commenced so the court would have to find that the offer that was made was commensurate with the actual amount of damage and would have to have a damage hearing it at a minimum right at a minimum and with respect to the question about whether  evidentiary hearing was held before the imposition of the sanction of this case as your honor pointed out he did schedule a hearing he did mention the importance of having a hearing at the oral argument on the sanctions motion and the next day he issues an order cancelling the evidentiary hearing and he writes this which is a little confusing the evidentiary issue as to responsibility between plaintiff and plaintiffs past and current counsel shall be deferred until after the merits of the case are adjudicated and the reasonable conclusion from that is after the complete adjudication on the merits of the case which as we know did not actually happen in the normal course that evidence you're hearing on the sanctions issues was never held in the judge went ahead and made his decision with respect to the point made by opposing counsel about the fact that virginia properties would be receiving some sort of windfall because of rent increases there is absolutely no evidence in the record to suggest that the amount of the increased rent from the rent stabilization would approach the total damages suffered by virginia properties as a result of the collapse of the town the simply no evidence of the record it's pure speculation and it's all three of them for virginia properties all agreeing that virginia properties are liars i take exception with this and i think that if you look closely at the affidavits that were filed by all three law firms you will see that what those law firms are saying and i'm going to specifically refer to mark creed he was the first attorney of record says that he was not aware of any fraud during the course of his reputation representation but based upon the april order issued by the judge he says why i don't know anything about that if the judge says that they're liars they're liars but that's not something that he had personal knowledge of and lamb of our last he said something similar the third lawyer sabella that they were  if they said that they had done it doesn't mean that what they are say isn't relevant to whether it was your plan that did something wrong it is yeah they were wrong you are correct and i would agree with that but i was saying something in addition to that which is that none of the lawyers are testifying that they actually have direct personal knowledge of what lies told by the i yes and with respect to the and because there was no hearing they were never subject to cross examination for example with respect to the statements that they were making that is correct and with respect to the to the third attorney mr sabella who also was not sanction mr sabella one step further than that he said even based on everything that he now knows about the case with the late produced state and city filings with everything else he concludes that this is not a basis for him to abandon the action and he thought that in good faith he was able to continue pursuing the action so that is a particularly relevant point about whether or not there is fundamentally a fraud at work here and whether there is enough evidence to find that there was a fraud on the court  the last thing that i wanted to go to were comments about the yen testimony because it really does serve as an underpinning of the court's belief which is mistaken that there is testimony in the record that brick pointing waterproofing and went to work are totally unreal they did to any damage caused by t mobile and they keep citing to mr yen but if you review the end up position testimony he never actually says anything of  sort there are questions for example about whether team mobile had anything to do with the rear wall and mr yan answers no no they didn't have anything to do the rear wall there are other questions about about observational aspects of the of the building and whether those things that surrounded the building had suffered do with t mobile but but again doesn't say this sort of penultimate statement which is there's absolutely no waterproofing link brick pointing or lintel work that is caused by t simply doesn't say that and so relying on that to draw a connection between two sets of documents and using that to conclude that one must be fraudulent is an extraordinary thing for this court to do and totally improper in our opinion minimum we need some expert proof