UNITED STATES CO URT 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 appella te record, this pa nel 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 This order and judgment is not binding precedent, except under the doctr ines of law of the case, res judicata, and collateral estoppel. It may be cite d, however, for its persuasi ve value consistent with Fed. R. App. P. 32.1 a nd 10th Cir. R. 32.1. FILED United States Court of Appeals Tenth Circuit 

### February 19, 2013
Elisabeth A. Shumaker Clerk of Court- 2 - Steven Dunn is a lawyer who defended Anderson, Crenshaw and Associates, L.L.C. (ACA) in a class action under th e Fair Debt Collection Practices Act (FDCPA). When the litigation finally settled, the court aw arded 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 in surer refused to cover the loss because ACA failed to file a timely claim. After hearing ev idence 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 depr ive Ms. Anchondo of a potential recovery from the insurer. As sanc tion for their litigation misconduct, the court ordered Mr. Dunn and Mr. Backal to pay Ms. An chondo and her counsel the damages and fees owed by ACA plus the costs incu rred in litigating this matter. More specifically, th e district court found that Mr. Dunn and Mr. Backal knew ACA had a professional liability policy su fficient to cover the amounts owed to Ms. Anchondo; that the pair acted in bad fa ith 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 w ith Mr. Backal. The court considered lesser sanctions but, noti ng repeated miscon duct by Mr. Dunn and Mr. Backal and their defian ce of earlier court-ordered sa nctions, concluded that its- 3 - “monetary sanction is the least available sanction to adequately compensate the Plaintiff, punish Dunn and B ackal, and deter similar misconduc t.” Aplt. App. at 6. The power of a district c ourt 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 expl anation for events and his assurance that he never intended to hide insurance information from the plaintiff. Mr. Dunn, however, offered different and c onflicting excuses for fa iling to reveal the existence of insurance during discovery, and a finder of fact is ordinarily free to find such inconsistencies undermin e 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 di strict 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 “dis credited testimony is not considered a sufficient basis for drawing a contrary conc lusion” 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 explanati ons for their conduct. The court relied on the fact that ACA had professional liabil ity coverage for suits arising from its- 4 - wrongful acts; that Mr. Dunn and Mr. Back al knew this; and th at during discovery Mr. Dunn failed to turn over documents refl ecting insurance appli cable 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 di strict court’s finding that his relationship with ACA exceeded that of a normal attorney-client relationship. But the evidence demonstrates a peculiarly cl ose 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 mana ging 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 ci rcumstances, we cannot say th e district court’s finding of a particularly special and close relationship was clearl y wrong. Neither do we understand Mr. Dunn to attack the district c ourt’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 act ively participated. None of Mr. Dunn’s remaining arguments is any more persuasive than these and the district court’s judgment with resp ect to him is affirmed. For her part, Ms. Anchondo requests attorn ey fees and costs with re spect to Mr. Dunn’s appeal under the FDCPA’s fee-shifti ng provision, 15 U.S.C. § 1692 k(a)(3). Mr. Dunn has not opposed this request. Accordingly, we grant the request and remand the matter to- 5 - the district court to determ ine 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