FI L ED U.S. COURT OF A P P E A LS E LE V EN T H C IR C U IT NOVEMB ER 30, 2006 THOMAS K. KAH

N CL ERK [DO NOT PUBLISH] IN THE UN ITED STATES COURT OF APPEALS FO R T HE EL EV EN TH CIRC UI T

____ ____ ____ ____ ____ ____ N o. 06- 1231 6 Non-A rgum ent Calendar

____ ____ ____ ____ ____ ____ D. C. Docket N o. 03-01710 -CV -T -17-MSS COLLEEN MACORT, ACC ES S N OW , INC. , a Fl or ida not -f or -p ro fi t co rp or at io n, Pl ai nt iff s- App el le es , ve rs us PRE M, INC. , a

Florida co rp or at iond. b. a. Bu dge t In n o f Sara so ta , Defen da nt -Ap pe ll an t.

____ ____ ____ ____ ____ ____ Appeal f rom the United State s District Court fo r the Mi ddl e D istri ct

of F lor ida

____ ____ ____ ____ ____ ____ _ (N ove m be r 30, 200 6) Be fo re CA RN E S, W IL SO N and P RY O R, Ci rc uit Jud ge s.2

PE R CU RIA M: Prem , I nc., m ore com

m onlyknown as Budget Inn of Sara sota (Budget), ap pe al s th e dis tr ic t c ourt’ s or de r ad opt ing the m ag istrate j udge ’ s r ep ort and re co m m en da tio n de ny ing Bu dge t’ s m oti on f or f ee s, c ost s and s an ct ion s a ga ins t Co ll een Mac or t an d Acc es s No w, Inc . I. In200 3, Ma co rt

and A cc es s N owf

ile d su it ag ai nst

Bu dge t f or f ai lin g to co m ply w iththe A m er ic anw ithD isa bil iti es A ct . D ur ing Ma co rt ’ s Apr il 2004 de posi tio n, it

be cam e cl ear that sh e la ck ed standi ng t o purs ue he r cl ai m . Am onth af te r the de posi tio n, Bu dge t f ile d am oti on t o di sm iss f or la ck of standi ng and a m oti on f or f ee s and s an ct ion s purs uant t o F la . Ru le s P ro f’ l C ondu ct R. 4- 1. 8, F ed . R. Civ. P . 11, and 28 U. S. C. § 192 7. I n the fees and sanction m otion Budget as se rte d t ha t M aco rt’s c ou ns el fai le d t o c on du cta su ffi ci en t p re-s ui t i nv es ti ga ti on . Se ve ra l day s late r, Ma co rt ’ s c ouns el se nt B udge t a pr opos ed j oin t m oti on t o dis m iss w ith out

pr ej udi ce . B udge t, w an tin g it s own m oti on t o di sm iss and m oti on fo r fe es and s an ct ion s to be c onsi de re d, did not r es pond to the pr opos ed

j oin t m ot io n. Ma co rt the n f ile d it s own se parate m oti on f or the dis tr ic t c ourt t o di sm iss3

the suit with prej udice, and the court did so. A t the tim e the court granted Mac or t’s m ot io n t o d is m is s, Bu dg etha d n ot y etrece iv eda co py of th atm ot io n. T he c ourt or de re d e ac h party to be ar it s own c ost . B udge t f

ile d am oti on t o va cate an d se t a sid e the j udgm en t un de r Fe d. R. Ci v. P . 59( e) and 6 0( b) and r en ew ed it s m otion for f

ees and sanctions. T he district court denied bo th m otion s, and Budget ti m el y ap pe al ed . W e co nsi de re d th at

appe al and d ec ide d th at

the dis tr ic t c ourt ha d a

buse d it s dis cr et ionby

dis m iss ing the sui t w ith out a llo w ing Bu dge t an op portun ity to re spon d. W e va cate d bo th the dis tr ic t c ourt’ s or de r gr an tin g th e m oti on t o di sm iss an d th at part of it s or de r de ny ing Bu dge t’ s m oti on f or f ee s and s an ct ion s ba se d on Fla. Rules Prof’ l Conduct R. 4-1.8 and 28 U. S. C. § 192 7. W e did affir m the part of the dis tr ic t c ourt’ s or de r de ny ing the m oti on f or f ee s and s an ct ion s in sof

ar a s it w as ba se d onRu le 11 g ro unds . On re m and, the district court decided that an evidentiary hearing wa s ne ed edon Bu dg et ’s san ct io ns m ot io n a ndrefe rredth e m at te r to a m ag is tra te jud ge . A ft er hol din g athr ee -h our

e vid en tiary

he ar ing on O ct obe r 20, 200 5, the m ag istrate j udge iss ued on Decem

ber 16, 2005 a report and rec omm endation th at the district co ur t d en y

Bu dg et ’s m ot io n fo r sa nc ti on s. Bu dg etfil edob jecti on s t o t he rep or t. On April 13, 2006, the district court adopt ed the m agistrate j udge’s r eport4

an d r ec om

m en da tio n, de ny ing Bu dge t’ s m oti on f or c ost s, f ee s and s an ct ion s. T he dis tr ic t’ s de nia l or de r cate gor iz ed Bu dge t’ s ob

j ec tio ns a s: (1 ) fa ili ng t o r ai se any spe ci fi c pr obl em s w iththe m ag istrate j udge ’ s r ep ort and m er el y r ec iti ng the b ac k g ro u n do f t h e c as e; (2 ) a s s er t i n g fa ct s n o tfo u n db y t h e mag i s t ra t e ju d g e’s re port tha t di d no t e ff

ec t the out co m e of

the de ci sio n; and ( 3) sim ply of fe ri ng a de ta ile d ana ly sis of

the r el ev an t l aw . T he dis tr ic t c ourt’ s or de r state d th at the m ag is tra te jud ge ’s fin di ng s wer e su pp or te d b y th e ev id en ce an d a do pt edth em . Bu dge t f ile d it s no tic e of

appe al the ne xt d ay , Apr il 14, 200 6. T he tr an sc ri pt o f the ev ide nti ar

y he ar ing w as not

a va ila ble to the c ourt or

the part ie s un til Jun e 20, 2006 , w el l a ft er

the dis tr ic t c ourt ha d a dopt ed the m ag istrate j udge ’ s r ep ort. II. Bu dge t f ir st c ont en ds tha t the dis tr ic t c ourt a dopt ed the w ro ng s tandard

of rev ie w in co ns id eri ng th e m ag is tra te jud ge ’s rep or t an d B ud ge t’s o bjec ti on s t o i t. Bu dge t c ont en ds tha t i ts o bj ec tio ns n ec es sit at ed de nov o r ev ie wand tha t the dis tr ic t c ourt c oul d no t have c ondu ct ed de nov o r ev ie wbe ca

use the he ar ing tr an sc ri pt w as not

a va ila ble and the re is no i ndi catio n th at the c ourt ha d li ste ne d to the tape-re cording of the evidenti ary hearing. It argues that the district court er ro ne ousl y c onc lud ed

that no spe ci fi c obj ec tio ns w er e ra ise d and i m pr ope rl y review ed the report only

for cle ar e rror.5

Mac or t ar gu es th atbe cau se Bu dg etfai le d t o ra is e an y sp eci fic ob

jecti on s, cl ear er ro r re vie ww as a ll that w as r equir ed . F urthe r, Ma co rt a sse rt s th at

e ve n if w e fi nd tha t B udge t di d m ak e spe ci fi c obj ec tio ns, w e shou ld p re sum e that the dis tr ic t c ourt c ondu ct ed

the pr ope r de nov o r ev ie w . Jon es v. P ill ow , 47 F . 3d 2 51, 253 (8 th C ir . 199 5) ( “ [W ] he re the r ec or d pr ovi de s no ind ic at ionof w he the r de novo r ev ie ww as c ondu ct ed , suc h r ev ie w , inc lud ing ar ev ie wof the he ar ing tr an sc ri pt o r ta

pe , m ay be pr es um ed . ”) . Ma co rt c la im s th at

the re is no i ndi catio n that B udge t e ve n tr ie d to de te rm ine w he the r the dis tr ic t c ourt ha d li ste ne d to the tape-re cording and th at the district court m ust have properly

review ed the report an d r ec om

m en da tio n be ca

use it de vot ed thr ee pa ge s of

it s op ini on t o adis cu ssi on of th e ap pr op ria te st an da rdof r ev ie w.

“ Inor de r to c ha lle nge the f ind ing s and r ec om

m en da tio ns o f the m ag istrate [j udge ] , aparty

m ust . . . f ile . . . w ri tte n ob

j ec tio ns whic h sh al l sp ec if ic al ly identify the portions of the proposed findi ngs and recom m endation to which obj ec tio n is m ad e an d th e spe ci fi c ba sis f or obj ec tio n. . . . Upon re ce ipt of objec tions m eeting the specificity requirem ent set out abov e, a United States D istri ct Jud ge sha ll m ak e a de nov o de te rm inatio n of tho se portio ns o f the r ep ort .

. . to w hic h ob

j ec tio n is m ad e an d m ay

a cc ep t, r ej ec t, or

m odi fy in w hol e or

in part , the f ind ing s or

r ec om m en da tio ns m ad e by

the m ag istrate [

j udge ] . ” H eath v . Jon es ,6

863 F.2d 815 , 822 (11th Cir. 1989). W e re view de novo the legal questio n of whether the district court applied the pr ope r standard

of r ev ie win ad opt ing the r ep ort and r ec om m en da tio n of

the m agistrate j udge. N orton v. Spencer, 351 F.3d 1, 4 (1st Cir. 2003 ) (“ [T ] his Court exam ines the legal conclusio ns of the district court, includin g the proper standard of r ev ie w , de nov o. ”) ; Y ea ge r v. Re lianc e St an dard L if e In s. Co . , 88 F . 3d 3 76, 380 (6 th C ir . 199 6) ( “ O ur r ev ie wof

the dis tr ic t c ourt’ s de te rm inatio n r eg ar din g the pr ope r standard

to ap ply . . . is de nov o. ”) ; N at

ur al Re s. D ef

. Co unc il, I nc . v. E . P. A . , 16 F . 3d 1 395, 140 0 ( 4thCi r. 199 3) ( ap ply ing de nov o r ev ie wto de te rm ine whether the district court applied th e corr ect legal standard). InL oC ont e v. D ugge r, 847 F . 2d 7 45 ( 11th C ir . 198 8) , w e de te rm ine d th at in ci rc um stanc es li ke tho se a t i ssu e in this c as e, the re are thr ee ty pe s of f ac t f ind ing s fo r pur pose s of de te rm ini ng r ev ie w ab ili ty on a ppe al : “ (1 ) fi ndi ngs of

f ac t m ad e by the m agistrate [j udge] to which the parties did not o bje ct; (2) f indin gs of fact m ad e by the m ag istrate [

j udge ] to w hic h th e part ie s di d ob j ec t w iththe obj ec tio ns being resolved d e novo bythe district court; and (3) independentfindings of fac t m ade by the district court.” Id. at 749. Most circuits agree that “ [i] n the absence of ati m el y f ile d ob j ec tio n, adis tr ic t c ourt ne ed not c ondu ct ade nov o r ev ie w , but instead m ust on ly satisfy itself that there is no clear err or on the face of the rec ord7

in o rd er to ac ce pt t

he r ec om m en da tio n. ” D iam ond v. Co lon ia l L if e & A cc ide nt In s. , 416 F . 3d 3 10, 315 ( 4thCi r. 200 5) ( quot at ion s om itt ed ); a cc or d Jo hnso n v. Z em a Sy s. Co rp . , 170 F . 3d 7 34, 739 ( 7thCi r. 199 9) ( “ If no o bj ec tio n or

onl y part ia l ob j ec tio n is m ad e [t o th e m ag istrate j udge ’ s r ep ort] , the dis tr ic t c ourt j udge re vie w s th ose uno bj ec te d po rt ion s f or c le ar e rr or . ”) ; U nit ed

S ta te s v. W ils on, 864 F. 2d 1 219, 122 1 ( 5thCi r. 198 9) ( not ing that the “ cl earl y e rr one ous” standard

is appropriate wher e there has been no ob j ection to the m agistrate j udge’s r uling ); D ry w al l T ap er s & P oin te rs v. L oc al 530 , 889 F . 2d 3 89, 395 ( 2d C ir . 198 9) (“ Where a

m agistrate [j udge] has been appoin ted to condu ct an evidentiary h e a r i n g , th e d i s t r i c tc o u rtr e v i e w s th e R e p o rtan dR e c o mme n d a t i o n u n d e r th e s a me cl earl y e rr one ous standard . ” (c iti ng W ool dr idg e v. Marl en e In dus. Co rp . , 875 F . 2d 54 0, 5 44 (6t h C ir.1 98 9) ). Where a proper, specific obje ction to th e m agistrate j udge’s r eport is m ade, itis cle ar t ha t t he di st ric t co ur t m us t co nd uc t a d e n ov o re vi ew of th atis su e. St oke s v. S ing le tary , 952 F . 2d 1 567, 157 6 ( 11th C ir . 199 2) ( quot ing L oC ont e, 847 F. 2d at 75 0) . I t i s c ri tic al that the obj ec tio n be suf fi ci en tly spe ci fi c an d no t a ge ne ral ob

jecti on to th e rep or t. Go ne y v. Cl ark , 74 9 F .2d5, 7 (3d Cir . 19 84 ). De no vo rev ie w im

pl ie s t ha t “ th e d is tri ctco ur t’s co ns id erat io n o f th e fac tu al is su e . . . be ind ep en de nt and b as ed upo n th e re co rd

be fo re the c ourt. T o th e ex te nt tha t the8

m ag istrate j udge ha s m ad e fi ndi ngs of f ac t ba se d up on the te sti m ony of the w itn es se s he ar d be fo re the m ag istrate j udge , the dis tr ic t c ourt i s ob lig at ed to reviewthe transcript or listen to the tape-rec ording o f those proceedings.” L oC ont e, 847 F . 2d at 75 0. T hus, the que sti on f

or us i s w he the r Bu dge t r ai se d aspe ci fi c obj ec tio n to the m ag istrate j udge ’ s r ep ort ne ce ssi ta tin g de nov o r ev ie w . A s w e ha ve a lr ea dy ind ic at ed , the dis tr ic t c ourt c hara ct er iz ed a ll el ev enof

Bu dge t’ s ob

j ec tio ns a s a re ci ta tio n of

the ba ck gr ound

of the c as e, or

ali st o f fa ct s om itt ed

f ro m the m ag istrate j udge ’ s r ep ort, or sim ply an e xpl an at ionof

the appl ic ab le law . O ur re vie wc onvi nc es us that B udge t’ s O bj ec tio n no . 1 m er el y r ec ite s langua ge f

ro m our pr ev iou s or de r re m an din g th e ca se and d oe s no t sp ec if ic al ly obj ec t t o anythi ng in the r ep ort and r ec om

m en da tio n. O bj ec tio ns n os. 3–1 1 do m er el y se t ou t the ap pl ic ab le law. No ne of t he th os e te n o bjec ti on s m eetth e sp eci fic it y req ui rem en t. Obj ection no. 2 is different. In it, Budget sets ou t fifteen f acts that we re om itted from

the m agistrate j udge’s r eport, obj ects to them not being found, and at le as t i m pli ci tly arg ue s th at

ha d th ose f

ac ts b ee n c onsi de re d, the c onc lus ionw oul d ha ve be enthat the r equir em en ts f or § 19 27 s an ct ion s w er e m et . A lth oughthe dis tr ic t c ourt do es not

e xpl ic itl y

state that i t a

ppl ie d de nov o r ev ie wto O bj ec tio n no. 2, the c ourt do es say

that i t “ re vie w ed

tho se f ac ts and ana ly ze d w he the r the ir9

inclusio n in the final [r] eport . . . would have war ranted a diff

erent conclusion.” T he c ourt de te rm ine d th at e ve n if tho se f if te enf ac ts h ad be enf ound , the r es ult w oul d st ill have be enthe sam e—Bu dge t f ai le d to e sta

bli sh i ts r igh t t o have § 19 27 sa nc ti on s awa rd ed . Wha t the dis tr ic t c ourt di d w ithBu dge t’ s O bj ec tio n no . 2 am ount s to de novo reviewof the m agistrate j udge’s f ailure to find the facts asser ted in that objec tion, because it is a legal conclusion th at those facts do not m atter. If that le ga l c onc lus ionis co rr ec t, the re is no p oin t i n de te rm ini ng whe the r the f ac ts d o ex ist . I f, on the oth er

hand, the dis tr ic t c ourt i s w ro ng a bout the a sse rt ed

f ac ts n ot m atte ri ng, the n B udge t i s e nti tle d to have it s a sse rt ionthat the f ac ts d o e xis t de ci de d. T h e n o n - av a i l ab i l i t y o f

th e tr a n s c r i p to f

th e e v i d e n t i a ry h e a r i n g a tth e t i me t h e d i s t ri ct co u rt o v erru l ed Bu d g et ’s o b je ct i o n s i s i rr el ev an tt o th e d i s t ri ct co u rt ’s conclusio n that the asserted fac ts do no t m atter. A nd, if the district court w as wr ong abo ut whether those fac ts do m atter, m aking a rem and necessary , the c ourt wil l h av e th e ev id en ti ary he ari ng tra ns cri pt on rem an d. II I. We tu rn n o w t o th e q u es t i o n o f w h et h erth e f ac t s ra i s ed i n Bu d g et ’s obj ec tio ns t o th e m ag istrate j udge ’ s r ep ort and r ec om m en da tio n, if

tr ue , w oul d10

ha ve e nti tle d B udge t t o § 1 927 or F la . Ru le s P ro f’ l C ondu ct R. 4- 1. 8 f

ee s and sanc tio ns. B udge t c ont en ds tha t the a ct ion s of Ma co rt ’ s a tto rn ey s m er it sanc tio ns be ca use the y f ile d su it w ith out

c ondu ct ing apr ope r pr e- sui t i nve sti ga tio n and be ca use the c ontra ct

be tw ee n M ac ort and the f irm e sse nti al ly

m ad e the f

irm the client. Ma cort asserts that Budget cannot m eet its § 1927 burden and that Fla. Ru le s Pr of’l Con du ctR. 4- 1.8 pro vi de s n o t hi rd -p art y cau se of a ct io n.

“ W e re vie wthe tr ia l c ourt’ s r uli ng o n an aw ar d of

sanc tio ns unde r 28 U . S. C. § 19 27 o nly

f or abuse of dis cr et ion . A s w e ha ve obs er ve d, the abuse of dis cr et ionstandard

of r ev ie wr ec ogni ze s th at

f or the m atte r in que sti on the re is a range of c hoi ce f or the dis tr ic t c ourt and s o lo ng a s it s de ci sio n do es not a m ount to a clear er ror of j udgm ent we will not reverse even if w e w ouldhave gone the other w ay ha d th e ch oic e be enour s to m ak e. ” Mc Mahan v. T oto , 256 F . 3d 1 120, 112 8 (11th Cir. 2001) (internal citation om itted). A. U nde r 28 U . S. C. § 19 27, “ [a ] ny a tto rn ey . . . w ho s o m

ult ipl ie s th e proceedings in anycase unrea sonablyor vexatiouslym ay be required by

the court to s at isf y pe rs ona lly

the e xc es s c ost s, e xpe nse s, and atto rn ey s’ f ee s r ea sona

bly inc ur re d be ca use of suc h c ondu ct . ” I d. T hus, the statut e se ts o ut a thr ee -p ro ng, co nj unc tiv e te st: ( 1) unr ea sona ble and v ex at iou s c ondu ct ; ( 2) suc h th at the11

pr oc ee din gs are m

ult ipl ie d; and ( 3) adol lar am ount of sanc tio ns tha t be ar s a fi nanc ia l ne xus to the e xc es s pr oc ee din gs. P et er son v. BM I Re fr ac tor ie s, 124 F . 3d 1386 , 139 6 ( 11th C ir . 199 7) . A ll thr ee r equir em en ts m ust be m et be fo re sanc tio ns ar e im pose d. W e ha ve he ld tha t be ca use of the pe na l natur e of

§ 19 27, it

is to b e str ic tly c onstru ed . I d. a t 13 95. “ Fo r sanc tio ns unde r se ct ion192 7 to be appropriate, som ething m ore than a lack of m erit is required. T he statute was designedto sanction atto rney s who willfully abuse the j udicial process by conduct tantam ount

to ba d f ai th. ” S ch w ar

tz , 341 F . 3d at 12 25. T he re m ust be ba d f ai th; m ere negligence is no t enough . Id. “ A deter m ination of bad faith is warranted w he re an a tto rn ey

kno w ing ly

or r ec kle ssl y

pur sue s af

ri vol ous cl ai m

or e nga ge s in litigatio n tactics that needlessly obstruct the liti gation o f non-frivolous claim s.” Id . T he dis tr ic t c ourt di d no t a buse it s di sc re tio n inf

ind ing that B udge t f

ai le d to pr ove the thr ee e le m en ts o f § 19 27, e ve n if the f if te en“ fa ct s” a sse rt ed

in its objec tions to the report and recom m endation are taken as true. A s an initial m atter, the language of § 192 7 m akes clear that it onlyapplies to un necessary fi lin gs a ft er

the law sui t ha s be gun. 28 U . S. C. § 19 27; se e al so M atte r of Y ag m an , 796 F. 2d 1 165, 118 7 ( 9thCi r. ) (“ Se ct ion192 7 do es not appl y to ini tia l pl ea din gs, sin ce it a ddr es se s on ly

the m ult ipl ic at ionof

pr oc ee din gs. I t i s on ly

pos sib le to12

m ult ipl y or pr olo ng p ro ce ed ing s a ft er the c om pla int is fi le d. ”) , a m en de d, 803 F . 2d 1085 ( 9thCi r. 198 6) . “ T he f ili ng o f a co m

pla int m ay be sanc tio ne d purs uant t o Ru le 11 o r a co urt’ s inhe re nt p ow er , but it m ay not be sanc tio ne d purs uant t o § 19 27 .” In re Keeg an Mg m t. Co ., Sec. Lit ig ., 78 F.3d43 1, 4 35 (9t h C ir. 1 99 6) . H er e, Bu dge t’ s f

ai lur e to g ive Ma co rt

the tw en ty -o ne day

sa fe harb or

pe ri od fo re cl ose s R

ule 11 s an ct ion s f

or the ini tia l f

ili ng o f a fr ivo lou s su it. A s ar es ult , w e can c onsi de r onl y

w he the r § 19 27 s an ct ion s are m er ite d by c ondu ct f oll ow ing the ini tia l f

ili ng o f thi s su it. Inor de r fo r § 19 27 s an ct ion s to be j ust if ie d, a ll thr ee f

ac tor s w e ha ve se t ou t ar e ne ce ssary . I f one f

ac tor is m iss ing , sanc tio ns c an not be im pose d. H er e w e fi nd that, e ve n c onsi de ri ng the a ddi tio na l f if te en“ fa ct s” f

ro m Bu dge t’ s ob

j ec tio ns t o the report and rec omm endation, Budget cannot sh ow that Mac ort’ s counsel im pr ope rl y m ult ipl ie d th e pr oc ee din gs. P ri or to Bu dge t’ s a

ppe al , thi s w as af

ai rl y sm al l, s im

pl e cas e wit h o nl y

a co m pl ai nt , in it ia l d is cl os ur es , andli m it eddi sc ov ery. A s so on a s M ac ort’ s law y er s w er e co nvi nc ed that sh e la ck ed

standi ng, the y

sou ght dis m iss al . Ma co rt ’ s a tto rn ey s di d no t f ile vol um ino us o r m

ult ipl e ple ad ing s, and they filed only

one lawsuit by

Macort a gainst Bud get. None of the a sserted ad di ti on al fact s ch an ge s t ha t.13 B. Fl a. Ru le s P ro f’ l C ondu ct R. 4- 1. 8 pr ohi bit s an a tto rn ey f ro m a cquir ing a pr op rie ta ry

in te res t i n t he su bjec t m at te r of li ti ga ti on th e at to rn ey

is co nd uc ti ng . N ev er the le ss, the r

ule doe s no t c re at e a thi rd party c au se of a ct ion . N one of

the ad dit ion al obj ec tio n f

ac ts c hange s th at . T he dis tr ic t c ourt di d no t e rr in de ny ing sanc tio ns unde r thi s r

ule r eg ar dle ss o f tho se a sse rt ed f ac ts. AFFIRMED.