Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-00545/USCOURTS-azd-2_10-cv-00545-1/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1681 Fair Credit Reporting Act

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WO

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

AOM Group, LLC,

Plaintiff, 

vs.

Wachovia Mortgage, FSB, et al.,

Defendants. 

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No. CV-10-00545-PHX-FJM

ORDER

The court has before it defendants Wells Fargo Bank and Golden West Savings

Association Service Company’s motion for sanctions and an award of attorneys’ fees (doc.

39). Plaintiff AOM Group failed to respond.

I

In 2007, Mahmood and Mary Tehrani executed a loan agreement with Wells Fargo

Bank’s predecessor in interest and secured it with a deed of trust on a home in Gilbert,

Arizona. The Tehranis stopped making payments in 2009. At the time, plaintiff advertised

its purported ability to assist homeowners facing foreclosure. Motion, ex. F. On behalf of

the Tehranis, plaintiff recorded apparently fraudulent documents, created a trust, and

executed assignments between plaintiff and the Tehranis in an effort to frustrate a trustee’s

sale of the home. Id., ex. E. On its own behalf, plaintiff then alleged a series of federal and

state claims related to the loan and the deed of trust against defendants. After defendants

Case 2:10-cv-00545-FJM Document 43 Filed 11/15/10 Page 1 of 4
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removed this action from state court, we denied plaintiff’s motion for a preliminary

injunction and temporary restraining order and advised plaintiff’s counsel to consider the

implications of pursuing the claims involved (doc. 17). Plaintiff then filed an amended

complaint and unsuccessfully attempted to ‘remove’ this action to bankruptcy court (doc.

30). In our Order of August 12, 2010, we granted defendants’ motion to dismiss plaintiff’s

claims, most of which plaintiff had abandoned in its response (doc. 36). We note that this

court has dismissed over a dozen similar actions filed by plaintiff. See AOM Grp., LLC v.

Wells Fargo Bank, No. CV-10-528-MHM, 2010 WL 3342005, at *1 n.1 (D. Ariz. Aug. 25,

2010) (collecting cases).

II

Defendants move for an award of reasonable attorneys’ fees as “the successful party”

in a “contested action arising out of a contract.” A.R.S. § 12-341.01(A). In exercising our

discretion to award fees under § 12-341.01(A), we consider (1) whether the unsuccessful

party’s claims or defenses were meritorious; (2) whether the litigation could have been

avoided or settled; (3) whether assessing fees would cause extreme hardship; (4) whether the

successful party prevailed in all respects; (5) whether the legal questions were novel; and (6)

whether an award would discourage other parties from litigating tenable claims or defenses.

Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d 1181, 1184 (1985). In

addition, because plaintiff failed to respond to defendants’ motion, we may grant it

summarily. LRCiv 7.2(i) (permitting non-compliance with briefing requirements to be

deemed consent to the granting of a motion).

The Associated Indemnity factors favor an award of attorneys’ fees. Plaintiff’s claims

lacked merit. Defendants reasonably rejected plaintiff’s settlement offer to dismiss its claims

in May 2010 without any reimbursement of attorneys’ fees. We cannot determine whether

an assessment of fees would be a hardship to plaintiff because it failed to respond, but we

note that it is not a distressed homeowner. Defendants prevailed on all claims, none of which

presented novel legal issues. Finally, given the nature of plaintiff’s claims, an award of fees

would not discourage parties with tenable claims. Therefore, we conclude that an award of

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reasonable attorneys’ fees is appropriate.

Defendants seek $67,928.70 in fees for 170 hours of attorney time. The number of

hours worked is high considering the lack of merit to plaintiff’s claims. Defendants represent

that about 75 hours of attorney time were spent in connection with plaintiff’s questionable

attempt to remove this action to bankruptcy court. They also contend that plaintiff’s use of

suspect recorded documents and a trust arrangement sets this action apart from typical

foreclosure actions involving unsophisticated parties. We agree that this action was more

complex than a typical foreclosure action. Moreover, we note that plaintiff declined its

opportunity to challenge the reasonableness of defendants’ attorneys’ fees by failing to

respond. Nevertheless, we also agree with defendants’ assessment that plaintiff’s claims

required “only a perfunctory review of the applicable law.” Motion at 6. An award of

attorneys’ fees under § 12-341.01(A) “should be made to mitigate the burden of the expense

of litigation to establish a just claim or a just defense.” A.R.S. § 12-341.01(B). “It need not

equal or relate to the attorney fees actually paid or contracted.” Id. Based on the merits of

plaintiff’s claims, we conclude that an award of attorneys’ fees in the reduced amount of

$45,000.00 is sufficient to mitigate defendants’ burden.

III

Defendants also move for sanctions against plaintiff and plaintiff’s counsel pursuant

to Rule 11, Fed. R. Civ. P., 28 U.S.C. § 1927, and this court’s inherent authority. Defendants

assert that plaintiff’s counsel violated Rule 11 by presenting claims through pleadings

without performing a reasonable inquiry into their factual support. See Rule 11(b), Fed. R.

Civ. P. Defendants do not mention the safe harbor and separate motion requirements for a

motion under Rule 11(c)(2), Fed. R. Civ. P., presumably because they have not been met.

Instead, they rely on Rule 11(c)(3), Fed. R. Civ. P., which permits sanctions on the court’s

initiative after an order to show cause. With respect to 28 U.S.C. § 1927, defendants assert

that plaintiff’s counsel “unreasonably and vexatiously” multiplied these proceedings by

attempting to remove this action to bankruptcy court in bad faith. 28 U.S.C. § 1927

(extending personal liability to a party’s counsel for excessive costs incurred because of

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misconduct). Finally, defendants invoke our inherent authority to sanction conduct in bad

faith. See B.K.B. v. Maui Police Dep’t, 276 F.3d 1091, 1107 (9th Cir. 2002).

In our Order of August 12, 2010, we admonished plaintiff’s counsel to review his

obligations under Rule 11, Fed. R. Civ. P., and this court’s Standards of Professional

Conduct (doc. 36). We agree with defendants that the conduct of plaintiff and plaintiff’s

counsel in connection with this action was troublesome. Because defendants are otherwise

receiving an award of reasonable attorneys’ fees which reflects the consequences of this

conduct, however, we conclude that sanctions are unnecessary.

IT IS THEREFORE ORDERED GRANTING IN PART and DENYING IN

PART defendants’ motion for sanctions and an award of attorneys’ fees (doc. 39). We

award attorneys’ fees in the amount of $45,000.00 in favor of Wells Fargo Bank and Golden

West Savings Association Service Company and against AOM Group, LLC. We deny the

motion with respect to sanctions.

DATED this 12th day of November, 2010.

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