Opinion ID: 184923
Heading Depth: 2
Heading Rank: 2

Heading: The Denial of Sanctions

Text: 26 The Benders complain that the FDIC acted in bad faith (1) by crediting their March 1995 payment in a way contrary to their explicit instructions, (2) by attempting to enforce the district court's judgments before they were final, and (3) by filing and then refusing to remove a lien against the appellants' real property despite the fact that they had paid the principal and interest due on all the notes and that Mr. Bender had posted a supersede as bond sufficient to ensure payment of any amount that might remain owing to the FDIC. Given the nature of this conduct, the Benders maintain, the district court's unexplained denial of sanctions was an abuse of discretion. 27 The FDIC argues that the district court properly denied the Benders' motion. It maintains that because, prior to the tender of the March 1995 payment, it informed the Benders that it would credit the payment in accordance with the terms of the underlying note, it cannot be said that it acted in bad faith when it proceeded to do so. The FDIC also asserts that it did not engage in premature collection activity because it justifiably relied on the district court's statement, in its February 28, 1996 order, that the judgments on the complaint and the amended complaint were both final. The FDIC failed, however, to offer any justification for its refusal to remove the lien on appellants' property after the notes had been satisfied and the supersede as bond covering any remaining liability had been posted. When asked about the lien at oral argument, counsel for the FDIC asserted that the agency had the right to pursue redundant remedies. Counsel admitted, however, that the FDIC had used the lien for leverage in settlement discussions. 28 Whatever the merits of their first two allegations, we are satisfied that appellants raise a legitimate question as to whether the imposition of, and refusal to release, an apparently unnecessary lien constitutes bad faith. See Chambers v. Nasco, 501 U.S. 32, 45-46 (1991) (holding that a court may exercise its inherent power to impose a sanction when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.) (citation and internal quotation marks omitted). The district court's decision not to impose sanctions may be correct, but under the circumstances it requires an explanation. We therefore remand this issue as well.