Opinion ID: 6326729
Heading Depth: 3
Heading Rank: 3

Heading: The Court’s Inherent Power

Text: Because “[this court] can affirm [the district court] on any ground supported by the record,” United States v. Mazkouri, 945 F.3d 293, 307 (5th Cir. 2019), the Debt Collection Defendants argue that, even if neither of the statutes relied upon by the district court authorized the award of attorneys’ fees against Wood and Chatman, we should nonetheless hold that all of the sanctions were appropriately levied under the court’s inherent power. The Debt-Collection Defendants are correct that, in a situation where a party acts in bad faith and “neither the statute nor the rules [is] up to the task [of sanctioning the conduct], the court may safely rely on its inherent power” to assess attorney’s fees. Chambers v. NASCO, Inc., 501 U.S. 32, 50 (1991). As we have stated, this is true even where a statute would otherwise govern the imposition of attorneys’ fees in the case. Boland Marine Mfg. Co. v. Rihner, 41 F.3d 997, 1005 (5th Cir. 1995) (quoting Chambers, 501 U.S. 32, 50). However, a specific finding that the sanctioned party acted in bad faith is a prerequisite for the imposition of such inherent-power sanctions. Dawson v. United States, 68 F.3d 886, 895 (5th Cir. 1995). In its discussion of the award of attorneys’ fees under FDCPA and TFDCPA, the district court found that Chatman and Wood acted in bad faith because they “manufactured a case by misusing federal and state debt collection statutes” by directing clients to send deliberately misleading debt dispute letters. But this finding appears to have been made sua sponte and in the absence of any evidence; no party argued or introduced evidence that the debt dispute letters Ozmun sent were “deliberately deceptive and intentionally confusing” before the district court found they were so. Moreover, multiple courts have found identically worded debt dispute letters 13 Case: 19-50397 Document: 00516252490 Page: 14 Date Filed: 03/24/2022 No. 19-50397 to be clear and entirely sufficient to dispute a debt under the FDCPA. As this court stated in Tejero, which involved an identically worded debt dispute letter and in which this court reversed Judge Sparks’ sanctions order against the plaintiff’s attorneys for essentially the same conduct as in this case, Here, the district court found the Attorney-Appellants “intentionally” drafted an unclear dispute letter. The relevant part of the letter reads: “My monthly expenses exceed my monthly income . . . and the amount you are reporting is not accurate either.” Aside from invoking the word “dispute,” we struggle to see how a debtor could dispute a debt more clearly than by writing, “the amount you are reporting is not accurate.”. . . We are not alone on this issue. The Seventh Circuit, and every district court within it to have considered the matter, has concluded that the phrase “the amount reported is not accurate” unambiguously and clearly “dispute[s]” a debt—“[t]here is simply no other way to interpret this language.” Tejero, 955 F.3d at 460-61 (citing Evans v. Portfolio Recovery Assocs., LLC, 889 F.3d 337, 346 (7th Cir. 2018)); see also Jones v. Portfolio Recovery Associates, LLC, Case No. 1:16-CV-572-RP (W.D. Tex. Aug. 16, 2017) (jury verdict of $61,000 on nearly identical claims for improper credit reporting). The district court also found that Ozmun’s claim under the TFDCPA was brought in bad faith because it was not a request for injunctive relief and did not plead actual damages. But Ozmun pleaded damage to his credit report and reputation, which are cognizable injuries. See Sayles v. Advanced Recovery Sys., Inc., 865 F.3d 246 (5th Cir. 2017) (identifying non-monetary actual harm caused by failing to credit-report a consumer’s dispute). The Tejero court also concluded that that plaintiff had a non-frivolous basis to bring his claim under the TDCA even if he lost on that issue on summary judgment under essentially the same underlying facts as in this case. To again quote this court’s opinion in Tejero: 14 Case: 19-50397 Document: 00516252490 Page: 15 Date Filed: 03/24/2022 No. 19-50397 “[I]t’s also possible the district court thought the claims were brought for an improper purpose—to drum up business for the lawyers and extract attorney’s fees from unsuspecting debt collectors. But when a complaint is well grounded in fact and warranted by existing law, only under unusual circumstances should the filing of papers constitute sanctionable conduct. And the inquiry into whether an improper purpose or unusual circumstances existed should be based on the objective reasonableness of the filing, not subjective suspicion. Tejero, 955 F.3d at 460 (internal quotation marks and citations removed); see also Nat’l Ass’n of Gov’t Emps., 844 F.2d at 224 (“[P]urely subjective elements should not be reintroduced into the determination concerning ‘improper purpose.’”); Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d 512, 528 (5th Cir. 2016) (“An attorney’s conduct is judged under each standard with an objective, not a subjective, standard of reasonableness.”). Here, as also occurred in Tejero, “the district court denied PRA crossmotion for summary judgment on the FDCPA claim—which indicates [Appellant’s] position was far from frivolous. In fact, it was so substantial that the district court thought it warranted a trial.” Tejero v. Portfolio Recovery Assocs., L.L.C., 955 F.3d 453, 459 (5th Cir. 2020) (emphasis original). Thus, Ozmun’s claims brought under the TFDCPA were not a “clear misuse of the TFDCPA” as the district court stated. They simply failed on summary judgment. For these reasons, we hold that the district court erred in finding that Wood and Chatman acted in bad faith, and thus we decline to affirm the award of attorney’s fees against them under the court’s inherent power.