UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

 

ELSA ANCHONDO, on behalf of herself 

and all others similarly situated, 

 Plaintiff-Counter- 

 Defendant-Appellee, 

v. 

STEVEN RICHARD DUNN; THOMAS 

BACKAL, 

 Appellants, 

and 

ANDERSON, CRENSHAW and 

ASSOCIATES, L.L.C., 

 Defendant. 

No. 12-2002 

(D.C. No. 1:08-CV-00202-RB-WPL) 

(D. N.M.)

 

ORDER AND JUDGMENT*

 

Before HARTZ, EBEL, and GORSUCH, Circuit Judges. 

 

 

 

*

 After examining the briefs and appellate record, this panel has determined 

unanimously to grant the parties’ request for a decision on the briefs without oral 

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore 

ordered submitted without oral argument. This order and judgment is not binding 

precedent, except under the doctrines of law of the case, res judicata, and collateral 

estoppel. It may be cited, however, for its persuasive value consistent with 

Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. 

FILED 

United States Court of Appeals 

Tenth Circuit 

February 19, 2013

Elisabeth A. Shumaker 

Clerk of Court
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Steven Dunn is a lawyer who defended Anderson, Crenshaw and Associates, 

L.L.C. (ACA) in a class action under the Fair Debt Collection Practices Act 

(FDCPA). When the litigation finally settled, the court awarded the plaintiff, Elsa 

Anchondo, her fees and costs. But ACA was unable to pay those fees and costs — 

indeed, it is now bankrupt — and ACA’s insurer refused to cover the loss because 

ACA failed to file a timely claim. After hearing evidence from the parties, the 

district court found that Mr. Dunn and Thomas Backal, ACA’s president and chief 

operating officer, acted in bad faith to deprive Ms. Anchondo of a potential recovery 

from the insurer. As sanction for their litigation misconduct, the court ordered 

Mr. Dunn and Mr. Backal to pay Ms. Anchondo and her counsel the damages and 

fees owed by ACA plus the costs incurred in litigating this matter. 

More specifically, the district court found that Mr. Dunn and Mr. Backal knew 

ACA had a professional liability policy sufficient to cover the amounts owed to 

Ms. Anchondo; that the pair acted in bad faith in failing to disclose (indeed, denying) 

the existence of this coverage despite appropriate requests during the discovery 

process; that the pair acted in bad faith in failing to file a timely claim on the policy; 

and that Mr. Dunn’s special relationship with ACA and his participation in the 

scheme made it appropriate to hold him jointly liable with Mr. Backal. The court 

considered lesser sanctions but, noting repeated misconduct by Mr. Dunn and 

Mr. Backal and their defiance of earlier court-ordered sanctions, concluded that its 
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“monetary sanction is the least available sanction to adequately compensate the 

Plaintiff, punish Dunn and Backal, and deter similar misconduct.” Aplt. App. at 6. 

The power of a district court to sanction bad faith litigation tactics is well 

settled. See, e.g., Morganroth & Morganroth v. DeLorean, 213 F.3d 1301, 1317 

(10th Cir. 2000), overruled on other grounds by TW Telecom Holdings Inc. v. 

Carolina Internet Ltd., 661 F.3d 495 (10th Cir. 2011). Still, Mr. Dunn says, the 

district court erred when it rejected his innocent explanation for events and his 

assurance that he never intended to hide insurance information from the plaintiff. 

Mr. Dunn, however, offered different and conflicting excuses for failing to reveal the 

existence of insurance during discovery, and a finder of fact is ordinarily free to find 

such inconsistencies undermine a witness’s credibility. Wessel v. City of 

Albuquerque, 463 F.3d 1138, 1145 (10th Cir. 2006) (“We give the district court’s 

determinations regarding the credibility of witnesses great deference.”). 

Mr. Dunn replies that, at the least, the district court went astray by resting its 

sanctions award solely on its disbelief of Mr. Dunn’s and Mr. Backal’s testimony. 

And this, he says, violates the rule that “discredited testimony is not considered a 

sufficient basis for drawing a contrary conclusion” that they acted in bad faith. Bose 

Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485, 512 (1984). But as it happens 

the district court cited a number of facts supporting its decision beyond its disbelief 

of Mr. Dunn’s and Mr. Backal’s explanations for their conduct. The court relied on 

the fact that ACA had professional liability coverage for suits arising from its 
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wrongful acts; that Mr. Dunn and Mr. Backal knew this; and that during discovery 

Mr. Dunn failed to turn over documents reflecting insurance applicable to the suit; 

and that the pair allowed the period for filing a timely claim to lapse. All these facts, 

quite apart from and in addition to the court’s disbelief of Mr. Dunn’s and 

Mr. Backal’s testimony, contributed to its inference of bad faith. 

Separately, Mr. Dunn challenges the district court’s finding that his 

relationship with ACA exceeded that of a normal attorney-client relationship. But 

the evidence demonstrates a peculiarly close relationship between Mr. Dunn and 

Mr. Backal. Mr. Dunn was a signatory on ACA bank accounts; accounts show him to 

be a manager of ACA; Mr. Dunn was a managing officer of two corporations with 

Mr. Backal; and Mr. Dunn located his law office at ACA’s offices until ACA went 

out of business. In these circumstances, we cannot say the district court’s finding of 

a particularly special and close relationship was clearly wrong. Neither do we 

understand Mr. Dunn to attack the district court’s legal premise that an attorney with 

these sorts of close ties to a client might be held jointly responsible for a client’s 

misdeeds in which he actively participated. 

None of Mr. Dunn’s remaining arguments is any more persuasive than these 

and the district court’s judgment with respect to him is affirmed. For her part, 

Ms. Anchondo requests attorney fees and costs with respect to Mr. Dunn’s appeal 

under the FDCPA’s fee-shifting provision, 15 U.S.C. § 1692k(a)(3). Mr. Dunn has 

not opposed this request. Accordingly, we grant the request and remand the matter to 
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the district court to determine an appropriate amount. See Anchondo v. Anderson, 

Crenshaw & Assoc., L.L.C., 616 F.3d 1098, 1107 (10th Cir. 2010). Pursuant to this 

court’s earlier order, Mr. Backal’s appeal remains stayed as a result of his personal 

bankruptcy proceedings. Therefore, that portion of the appeal remains abated and 

judgment shall not issue with respect to Mr. Backal. 

 Entered for the Court 

 Neil M. Gorsuch 

 Circuit Judge