Source: https://www.smithlaw.bz/the-law-against-frivolity.html
Timestamp: 2019-04-19 03:04:59+00:00

Document:
In 1986, the Indiana legislature passed a law against "frivolous, unreasonable, or groundless" actions or defenses on a claim.(1) During the eleven years since the statute was enacted, our state appellate courts have crafted an extensive body of common law laying the boundaries over which litigants and their counsel must not cross without risking violating the law against frivolity.
In addition to refraining from filing an action or asserting a defense that is frivolous, unreasonable or groundless, the cost statute prohibits continuing to litigate a claim or defense if it clearly becomes frivolous, unreasonable or groundless after it was originally asserted. Therefore, attorneys have a continuing duty to re-assess the validity of claims and defenses as investigation and discovery progresses.
Suggesting to a court that an action or defense is or has become frivolous is a duty which the litigator owes to the client. However, it should be reserved for appropriate cases. Handling a case with a charge of frivolity hanging over the action can be distracting to say the least. In our judgment, it is very important for every trial lawyer to know the law which has been developed in this area.
Sec.1. (a) In all civil actions, the party recovering judgment shall recover costs, except in those cases in which a different provision is made by law.
A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law.
In Kahn v. Cundiff(2), the plaintiffs, Paulette Brown and Terry Willis, were injured when their vehicle was struck by a car being operated by the defendant, Rachel Cundiff. The car that Rachel Cundiff was driving was owned by her husband, Larry Cundiff. The plaintiffs filed suit against both Rachel and Larry Cundiff on December 1, 1996. On the same day the plaintiffs tendered interrogatories, a request for production and a request for admissions to the defendants. The Cundiffs filed several motions for extension of time to respond to the plaintiffs' discovery requests, as well as two motions to dismiss and a motion for judgment on the pleadings for failure to state a claim against Larry Cundiff. The defendants responded to the plaintiffs' request for production of documents and request for admissions on April 25, 1987.
On June 9, 1987, the trial court denied all pending motions and set the case for trial to begin on June 16, 1987. On June 10, 1987, Larry filed a request for rulings on his motions to dismiss and on his motion for judgment on the pleadings. The trial court apparently denied Larry's renewed request.
(e) the plausibility of the arguments forwarded, including good faith efforts to extend or modify the law.
A finding of improper motive is not required. In Kahn v. Cundiff, plaintiffs' counsel asserted that I.C. 34-1-32-1 essentially codifies the obdurate behavior exception, which provides that a court may award attorney fees if a party has filed or continued a knowingly baseless claim and the trial court determines that such conduct was "'vexatious and oppressive in the extreme and a blatant abuse of the judicial process' Kikkert v. Krumm (1985), Ind., 474 N.E.2d 503, 505". Plaintiffs' counsel argued that since the trial court did not find that he had an improper motive in bringing and maintaining the action against Larry Cundiff, attorney fees were improperly awarded. However, the Court of Appeals disagreed.
In Brant v. Hester(15), the Court of Appeals reiterated the fact that a trial court is not required to find an improper motive on the part of counsel to support an award of attorney fees for violation of I.C. 34-1-32-1. Rather, the award is appropriately based solely upon the lack of a good faith and rational argument supporting the claim or defense asserted.
In Owens v. Schoenberger(18), the plaintiff brought a defamation action against a fraternity member who sent a letter to the presidents of fraternities on a college campus, in which the defendant urged fraternity members who had been in sexual contact with the plaintiff to go to Dr. Beard's office to be tested for sexually transmitted disease; saying that he had done so and that he had been treated for a sexually transmitted disease; and, suggesting that the plaintiff had given him the disease. The jury returned a verdict for the plaintiff and the trial court judge granted the plaintiff's motion for additur with regard to the compensatory damage award.
After the trial, the plaintiff moved to recover attorney fees under I.C. 34-1-32-1(1)(b). In support of that motion, the plaintiff asserted that three (3) months prior to trial, when the defendant was deposed, and during trial, the defendant admitted that: 1) he had absolutely no good faith basis for believing that the plaintiff had given him a sexually transmitted disease; 2) he had taken absolutely no steps to ascertain whether the plaintiff had a sexually transmitted disease; and, Dr. Baird testified that he had not diagnosed or treated the defendant for a sexually transmitted disease at the time to which the defendant referred in his letter to the fraternity presidents. Despite this evidence, the plaintiff stated that the defendant continued with his "baseless" defense of truth until the end of the three-day jury trial. Plaintiff's counsel did not seek any fees for their time spent in the initial investigation, pleading preparation and discovery. Rather, fees were sought only for plaintiff's counsels' immediate trial preparation (64 hours of work). The trial court granted the Plaintiff's motion and awarded $16,000.00 in attorney fees.
The defendant argued on appeal that the trial court abused its discretion when it awarded the plaintiff $16,000.00 in attorney fees. The Court of Appeals pointed out that the Indiana Supreme Court, in Kahn v. Cundiff(19), declared that during the pre-trial stage, I.C. 34-1-32-1 requires a litigant to re-evaluate and "'determine the propriety of continuing'" an action throughout the course of discovery. In addition, the Court of Appeals noted that I.C. 34-1-32-1(b)(2) provides that fees may be awarded against a party who continued to litigate the action or defense after the party's claim or defense clearly became frivolous, unreasonable or groundless. Therefore, the Court of Appeals concluded that the defendant in Owens had an obligation to re-evaluate and determine the propriety of continuing his defense of truth. Based on the defendant's admission during his deposition and during trial that he had "absolutely no information to this moment" that the plaintiff ever caused him to have "anything at all", the Court of Appeals held that the trial court "could well have found" that the defendant's continued assertion of the defense of truth after his deposition and through a three-day jury trial approximately three months later warranted an award of the "attorney trial fees" that the plaintiff incurred.
In Tipton v. Roerig(22), the Plaintiff, Ronald Tipton, experienced a bilateral hearing loss after undergoing dialysis treatment at Wishard Hospital. Tipton sued the hospital and his physician, alleging negligence during his medical treatment. Tipton's medical records revealed that during his hospitalization, he had received two drugs: Lasix (not manufactured by the Defendant, Pfizer, Inc.) and Cefobid (a drug manufactured by Pfizer). Tipton subsequently amended his Complaint to include a product liability claim against Pfizer, in its capacity as the manufacturer and seller of Cefobid, which was the drug that Tipton claimed had caused his injuries.
Dr. Perkins-Edwards stated her opinion that Tipton's injuries were caused by Lasix. There was no mention of Cefobid in the affidavit or in any of the contentions that Tipton presented to the medical review panel.
Approximately three months after receiving Dr. Perkins-Edwards' affidavit, Pfizer moved for Summary Judgment and requested costs and attorney's fees for the work that its attorney had done since the date of Dr. Perkins-Edwards' affidavit, contending that it had been improper for Tipton to continue litigating his claim against Pfizer while contending before the medical review panel that Lasix had caused his injuries.
The trial court found that continuing the action against Pfizer after receiving the doctor's affidavit fell within I.C. 34-1-32-1 (continuing to litigate an action after the claim had clearly become frivolous, unreasonable, or groundless). Therefore, the trial court ordered Tipton's attorney to pay Pfizer's reasonable and necessary costs and attorney's fees associated with the continued defense of the lawsuit after the date of Dr. Perkins-Edwards' affidavit.
Tipton's attorney appealed, arguing that it was not unreasonable for him to fail to dismiss the action against Pfizer because discovery had not been completed. In addition, he argued that he had not done anything to actively pursue the claim against Pfizer. Rather, he asserted that it was Pfizer's attorneys who pursued discovery against him, which "ran up their own costs".
In United Farm Bureau Mutual Insurance Company v. Ira(25), Ira, a Farm Bureau insured, sued Farm Bureau to enforce its obligation under an agreed judgment to pay Ira's future medical expenses which were "reasonably related" to a 1981 car crash. In July of 1988, Ira underwent his third surgery. He submitted his medical bills to Farm Bureau, and also provided Farm Bureau with letters from two of his treating physicians, Dr. Shields and Dr. Jelsma. Dr. Shields stated that Ira's injuries were related to the 1981 car wreck, but did not recommend surgery. Dr. Jelsma stated that Ira's cervical arthritis was "acquired and probably aggravated by" the 1981 collision.
Farm Bureau refused to pay the bills relative to Ira's third surgery, claiming that Dr. Jelsma's letter created some doubt as to the causal connection between the 1981 collision and the third surgery. In December of 1988, Dr. Jelsma submitted a second report stating that "the report would suggest that the changes occurred immediately after the accident and were related to the accident itself and then aggravated with the passage of time . . .". Ira subsequently deposed Dr. Jelsma, and the doctor again expressed the opinion that Ira's third surgery was related to the 1981 collision. Later, Farm Bureau offered to pay Ira's medical expenses if he would dismiss all of his claims against Farm Bureau. Ira refused.
A bench trial was held and the trial court judge determined that Ira's medical expenses were reasonably related to the 1981 crash and ordered Farm Bureau to pay the bills relative to Ira's third surgery. In addition, the trial court ordered Farm Bureau to pay Ira $18,000 in attorney fees.
1. An attorney must READ every paper before signing it.
2. He must make a reasonable pre-filing investigation of the FACTS.
3. He must research the LAW, unless he is certain he knows it.
4. The law as applied to the facts must REASONABLY WARRANT the legal positions and steps he takes. If existing law does not warrant these positions, a plausible argument for the extension of the law to the facts of the case is required.
5. It must be demonstrated, as the basis of pre-filing investigation and research, that there is a REASONABLE BASIS to name each defendant named, and to support each claim asserted. The shotgun complaint or answer, filed in the hope that discovery will produce the justification for it, is improper.
6. The adequacy of an attorney's investigation, research and legal analysis will be evaluated by the court under an OBJECTIVE STANDARD, namely, whether the attorney acted as a reasonably competent attorney admitted to federal practice. Except as to improper purpose, subjective good faith is not a defense to Rule 11 sanctions. A pure heart but an empty head is of no avail.
7. The attorney must CONTINUALLY RE-EVALUATE his positions and abandon them if they are no longer reasonably warranted.
8. An attorney must not have an IMPROPER PURPOSE, such as harassment or intimidation, in naming any defendant, asserting any legal position or taking any legal step.
2. (1989) Ind.App., 533 N.E.2d 164.
3. Plaintiffs' counsel asserted that the investigation that was conducted before suit was filed revealed that Larry Cundiff owned the car that Rachel Cundiff was operating at the time of the wreck; that Larry had "entrusted" the car to Rachel; that Rachel had a correctable vision problem; that after the wreck, Rachel had appeared dazed and incoherent and the plaintiffs had suspected that she was intoxicated, medicated or suffering from an illness. Plaintiffs' counsel argued that these facts supported a claim against Larry under either a negligent entrustment or a vicarious liability theory.
4. The collision in which Rachel Cundiff and the plaintiffs were involved occurred on I65, in Indianapolis. As Rachel came around a curve on the interstate, she was forced to swerve to try to avoid the plaintiffs' car - which was stopped in the inner northbound lane. However, Rachel sideswiped the plaintiffs' car.
5. (1989) Ind.App., 533 N.E.2d 164.
6. Kahn v. Cundiff (1989) Ind., 543 N.E.2d 627, in which the Supreme Court stated that "[b]ecause we believe the opinion of the Court of Appeals provides useful definitions of the standards to be applied under Ind.Code S34-1-32-1, we grant attorney Kahn's petition to transfer and affirm and adopt the decision of the Court of Appeals. Appellate Rule 11(B)(3), Ind. Rules of Procedure". 543 N.E.2d 627, 629.
7. (1989) Ind.App., 533 N.E.2d 164.
8. 533 N.E.2d 164, 170.
9. 533 N.E.2d 164, 170. The definition of "frivolous" contained in Kahn v. Cundiff has been applied in numerous subsequent Indiana decisions, including St. Mary Medical Center v. Baker (1993) Ind.App., 611 N.E.2d 135; Tipton v. Roerig, a Div. of Pfizer Pharmaceuticals (1991) Ind.App., 581 N.E.2d 1279; Elbert v. Elbert (1991) Ind.App., 579 N.E.2d 102; United Farm Bureau Mut. Ins. Co. v. Ira (1991) Ind.App., 577 N.E.2d 588; and, Brant v. Hester (1991) Ind.App., 569 N.E.2d 748.
11. 533 N.E.2d 164, 171.
12. 533 N.E.2d 164, 171.
13. 533 N.E.2d 164, 171.
14. 533 N.E.2d 164, 171.
15. (1991) Ind.App., 569 N.E.2d 748.
16. (1989) Ind., 543 N.E.2d 627.
17. 543 N.E.2d 627, 629.
18. (1997) Ind.App., West Law 346393.
19. (1989) Ind., 543 N.E.2d 627.
20. (1991), Ind. App., 581 N.E.2d 1279.
21. St. Mary Medical Center v. Baker (1993), Ind. App., 611 N.E.2d 135.
22. (1991), Ind. App., 581 N.E.2d 1279.
23. 581 N.E.2d 1279, 1284.
24. 581 N.E.2d 1279, 1284-1285.
25. (1991), Ind. App., 577 N.E.2d 588.
26. (1991) 577 N.E.2d 588, 597.
27. 115 F.R.D. 201 (E.D.Ky. 1987).
28. Federal Rule 11 provides, in pertinent part, that an attorney's signature on a pleading, motion or other paper constitutes a certificate by the attorney that "he has read the pleading, motion, or other paper, that to the best of his knowledge, information, and belief, formed after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation". Federal Rule 11 also states that "[i]f a pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney's fee".
29. In Kahn v. Cundiff (1989) Ind.App., 533 N.E.2d 164, plaintiffs' counsel argued that I.C. 34-1-32-1 provides an enforcement mechanism for the filing requirements found in Rule 11 of the Indiana Rules of Trial Procedure; and, that I.C. 34-1-32-1 is a codification of the penalty provisions of Federal Rule of Civil Procedure 11. The Indiana Court of Appeals agreed that I.C. 34-1-32-1 provides an enforcement mechanism against improper and unwarranted litigation. However, the Court stated that it did not agree that the statute represents a codification of Federal Rule 11's penalty provisions - even though the Court acknowledged that both Federal Rule 11 and I.C. 34-1-32-1 have similar purposes and provide for a court-ordered award of attorney fees. The Court of Appeals also stated that although the tests used to define a Federal Rule 11 violation are not determinative of its review of the propriety of an award of attorney fees under I.C. 34-1-32-1, those tests may still be helpful.
30. 115 F.R.D. 201, 206.
31. 115 F.R.D. 201, 206-207, emphasis added.
32. 115 F.R.D. 201, 207, emphasis added.
33. 115 F.R.D. 201, 207, emphasis added.
34. 115 F.R.D. 210, 207, emphasis added.
35. 115 F.R.D. 201, 207-208.
36. 115 F.R.D. 201, 208.
37. Although bad faith is relevant in an "improper purpose" analysis and in determining the amount of sanctions.
38. 115 F.R.D. 201, 208, citations omitted.
39. 115 F.R.D 201, 208.
40. 115 F.R.D. 201, 208, citations omitted, emphasis added.
41. 115 F.R.D. 201, 208, citations omitted.
42. 115 F.R.D. 201, 209.

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