Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_94-cv-05414/USCOURTS-caed-1_94-cv-05414-1/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 Diversity-Property Damage

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

NATIONAL UNION FIRE INSURANCE )

COMPANY OF PITTSBURGH, PA, )

)

)

)

Plaintiff, )

)

vs. )

)

)

CHESTER GARBER, et al., )

)

)

Defendant. )

)

)

No. CV-F-94-5414 REC

ORDER DENYING DEFENDANTS'

MOTION FOR SANCTIONS UNDER

RULE 11 (Doc. 324)

Defendants Chester and Emilia Garber have moved the court

for sanctions against counsel for National Union in the amount of

$2,500.00 pursuant to Rule 11, Federal Rules of Civil Procedure.

In so moving, the Garbers contend that the request for an

award of attorneys’ fees incurred by National Union in connection

with the various appeals involving this case made in National

Union’s Motion for Attorneys’ Fees filed on July 7, 2000 and in

National Union’s Updated Motion for Attorneys’ Fees filed on

December 20, 2002 is precluded by the Ninth Circuit’s decision in

Case 1:94-cv-05414-AWI-DLB Document 344 Filed 07/18/06 Page 1 of 6
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In re Vasseli, 5 F.3d 351 (9 Cir. 1993). th

In its Order filed on February 12, 2001, the court addressed

various issues raised by the parties in connection with National

Union’s Motion for Attorneys’ Fees filed on July 7, 2000. In the

February 12 Order, the court “concluded that the claims for

attorneys’ fees incurred during the bankruptcy proceedings and

appeals are recoverable for various reasons by National Union in

the Fraudulent Conveyance Action.” Because defendants did not

specifically object to the reasonableness of the attorneys’ fees

requested either in the context of the hours expended or the

hourly rates charged, the court deferred final resolution of the

amount of the award of attorneys’ fees and directed the Garbers

to file their opposition to the reasonableness of the attorneys’

fees sought by National Union. In the Garbers’ Response to

Reasonableness of Plaintiff’s Requested Attorneys’ Fees filed on

March 21, 2001 (Doc. 273), the Garbers asserted in pertinent

part:

6. The Court nowhere says anything about

attorneys’ fees in connection with Appeals,

and therefore it would appear that the Court

is not allowing $39,441.00 for Appeals

against either the Garbers or Ting. This is

in accord with In re Vasseli, 5 F.3d 351, 353

(9 Cir. 1993), which hold that the trial th

court does not have authority to award fees

for a frivolous appeal to the appellate

court. 

Thereafter, the Garbers appealed the judgment in this action and

the court further deferred resolution of the Motion for

Attorneys’ Fees pending completion of that appeal. Following

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Rule 11(b)(2), Federal Rules of Civil Procedure, provides in 1

pertinent part:

(b) Representations to Court. By presenting

to the court (whether by signing, filing,

submitting, or later advocating) a pleading,

written motion, or other paper, an attorney

... is certifying to the best of the person’s

knowledge, information, and belief, formed

after inquiry reasonable under the

circumstances, -

...

(2) the claims, defenses, and other legal

contentions therein are warranted by existing

law or by a nonfrivolous argument for the

extension, modification, or reversal of

existing law or the establishment of new law

....

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resolution of the appeal, National Union filed its Updated Motion

for Attorneys’ Fees on December 12, 2001, again requesting that

the court award attorneys’ fees incurred by National Union in

connection with the appeal, which included attorneys’ fees

incurred in connection with the various appeals between October

1, 2000 and November 3, 2002. 

The Garbers contend that counsel for National Union, Mr.

Reddie, “has chosen to ignore this clearly cited authority and

has filed once again for attorneys’ fees in connection with an

appeal” and argue that Mr. Reddie’s request is in violation of

Rule 11(b)(2).1

The court notes that the Garbers did not argue that this

court lacked authority to award the attorneys’ fees incurred by

National Union in the various appeals until after the court had

issued the February 12 Order. Furthermore, as quoted above, the

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February 12 Order specifically included the attorneys’ fees

incurred in connection with the appeals, the only remaining issue

being the reasonableness of the amount of the attorneys’ fees

sought by National Union. As National Union notes, the inclusion

of additional fees incurred in connection with the appeals set

forth in the Updated Motion for Attorneys Fees was merely an

updating the amount of attorneys’ fees incurred in connection

with the appeals in light of the February 12 Order.

In In re Vasseli, the Vassilis, debtors in a bankruptcy

proceeding, filed a motion for summary judgment against its

creditor, Wells Fargo Bank, which had filed a complaint in the

bankruptcy court to determine whether the debt incurred by the

Vassili’s use of a Wells Fargo credit card was dischargeable. 

The bankruptcy court granted the Vassili’s motion for summary

judgment and awarded attorneys’ fees to the Vassili’s as part of

the judgment pursuant to 11 U.S.C. 523 (d). Wells Fargo appealed

the award of attorneys’ fees and the grant of summary judgment to

the district court. The district court dismissed the appeal for

lack of jurisdiction because the notice of appeal was untimely

filed pursuant to Bankruptcy Rule 8002(a). The Vassilis then

moved the Bankruptcy Court for additional attorney’s fees for the

cost of the appeal to the district court, basing their motion on

Section 523(d), which provides in pertinent part:

[i]f a creditor requests a determination of

dischargeability of a consumer debt under

subsection (a)(2) of this section, and such

debt is discharged, the court shall grant

judgment in favor of the debtor for the costs

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of, and a reasonable attorney’s fee for, the

proceeding if the court finds that the

position of the creditor was not

substantially justified, except that the

court shall not award such costs and fees if

special circumstances would make the award

unjust. 

The Vassilis argued and the Bankruptcy Court agreed that

authority to include attorneys’ fees on appeal may implied under

Section 523(d). In reversing, the Ninth Circuit held:

... We hold that while § 523(d) does

authorize attorney’s fees for the debtor, it

does not grant the bankruptcy court authority

to award attorney’s fees to the debtor for

appellate representation, and refuse to read

the authority to award fees incurred on

appeal into § 523(d).

The appellate court, not the bankruptcy

court, has the authority under Rule 38 to

award damages for a frivolous appeal ....

Under Rule 38 any fee request for attorney’s

fees incurred by a prevailing party must be

made to the appellate court. Section 523(d)

does not give a bankruptcy court the power to

award attorney’s fees incurred on appeal. In

this case, the Vassilis should have applied

to the district court, not the bankruptcy

court, for costs incurred on their appeal

pursuant to Rule 38.

5 F.3d at 353-354. 

The court concludes that In re Vasseli does not control this

court’s authority to include attorneys’ fees incurred by National

Union in responding to the various appeals in this action. Here,

one of the grounds upon which National Union relies in seeking

attorneys, including those incurred on the appeals, is the bad

faith exception to the American Rule. In United States v.

Blogett, 709 F.2d 608, 610 (9 Cir. 1983), the Ninth Circuit th

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concluded that the district court had statutory authority under

28 U.S.C. § 1927 and the inherent power “to sanction counsel for

filing a frivolous appeal in bad faith, and that filing solely

for purposes of delay constitutes bad faith.” 

Consequently, the court rules that Mr. Reddie did not

violate Rule 11, Federal Rules of Civil Procedure and that the

Garbers motion is denied.

IT IS SO ORDERED.

Dated: July 13, 2006 /s/ Robert E. Coyle 

668554 UNITED STATES DISTRICT JUDGE

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