Court Opinion

ID: 9851804
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:20:02.450751+00
Date Added: 2024-06-11T09:22:15.709615
License: Public Domain

WIGGINS, Justice
(dissenting).
I dissent. Although I agree with the majority that Barnhill’s conduct is sanc-tionable, I disagree with the way the district court and the majority determined the amount of the sanction.
Iowa Rule of Civil Procedure 1.413(1) is patterned after Federal Rule of Civil Procedure 11, as amended in 1983. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 391-92, 110 S.Ct. 2447, 2453-54, 110 L.Ed.2d 359, 373 (1990) (quoting Federal Rule of Civil Procedure 11 as it existed after the 1983 amendment). We look to cases interpreting the 1983 amendment to Federal Rule of Civil Procedure 11 to aid us in our interpretation of rule 1.413(1). Weigel v. Weigel, 467 N.W.2d 277, 279 (Iowa 1991). In Weigel, we relied on Cooler & Gell to determine the proper standard of review. Id. at 280.
The first error made by the majority is to say a sanction under rule 1.413 has the “twin purposes of compensation and deterrence.” The cases cited by the majority do not support that proposition. Hearity v. Iowa District Court, 440 N.W.2d 860 (Iowa 1989), recognizes the intent of the rule is “to discourage parties and their counsel from filing frivolous lawsuits and to otherwise deter misuse of pleadings, motions, or other court papers.” Hearity, 440 N.W.2d at 864. Breitbach v. Christenson, 541 N.W.2d 840 (Iowa 1995), does not say compensation is a purpose of the sanction. Breitbach, 541 N.W.2d at 846. Breitbach says a sanction is warranted because “this matter has been very costly to the opposing litigants and the judicial system in terms of wasted time and money.” Id. Although, the court awarded the fees expended as a sanction, it did not say it made the award to compensate the party because this was not an issue in the case.
When Federal Rule of Civil Procedure 11 first was enacted, the circuits and the commentators were split on whether the purpose of a sanction was compensation or deterrence. See 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1334, 541-42 (3d ed. 2004) (discussing the different schools of thought as to the purpose of the rule). In 1990 the Supreme Court made it clear that the central purpose of a sanction under rule 11 is to deter baseless filings in district court. Cooler & Gell, 496 U.S. at 393, 110 S.Ct. at 2454, 110 L.Ed.2d at 374. The purpose of a sanction under rule 11 or rule 1.413 is not to compensate a party for attorney fees expended.
Although rule 11 allows an award of attorney fees to the opposing party, the rule’s mention of attorney fees does not create an entitlement to full compensation when an opposing party files a frivolous pleading. White v. Gen. Motors Corp., 908 F.2d 675, 683-84 (10th Cir.1990). The sanction chosen by the court should be the least severe sanction adequate to deter a party from filing frivolous pleadings. Navarro-Ayala v. Nunez, 968 F.2d 1421, 1426-27 (1st Cir.1992); In re Kunstler, 914 *281F.2d 505, 522 (4th Cir.1990); White, 908 F.2d at 684-85.6
The second error the majority makes is stating the district court followed the four-step test of the fourth and tenth circuits when it awarded the sanction to the defendant. The four-step test referred to by the majority is the roadmap developed by these circuits that a court should follow when awarding sanctions under rule 11 as it existed in 1983. The first step is to determine the reasonableness of the opposing party’s attorney fees incurred by defending the action. Kunstler, 914 F.2d at 523; White, 908 F.2d at 684. In determining the reasonableness, only the time an attorney expends in response to actions that are sanctioned should be considered. Bodenhamer Bldg. Corp. v. Architectural Research Corp., 989 F.2d 213, 218 (6th Cir.1993); Kunstler, 914 F.2d at 523. As my colleague, Justice Cady, noted when he was on the district court bench, “[w]hen a petition contains a mixture of frivolous and founded claims, only those expenses incurred in defending the frivolous claims may be awarded.” Mark S. Cady, Curbing Litigation Abuse and Misuse: A Judicial Approach, 36 Drake L.Rev. 483, 506 (1986-87).
The second step is to determine a sanction that equals the minimum amount necessary to deter misconduct. Kunstler, 914 F.2d at 524; White, 908 F.2d at 684-85. A court should not use a sanction to drive an attorney out of the practice of law. Kun-*282stler, 914 F.2d at 524. Decisions as to whether an attorney should be practicing are better left to our attorney discipline process. The amount of sanction is appropriate only “ ‘when it is the minimum that will serve to adequately deter the undesirable behavior.’ ” Doering v. Union County Bd. of Chosen Freeholders, 857 F.2d 191, 194 (3d Cir.1988) (quoting Eastway Constr. Corp. v. City of New York, 637 F.Supp. 558, 565 (E.D.N.Y.1986) (emphasis added)).
The third step is to determine the ability of the sanctioned party to pay. Rule 11 sanctions are analogous to punitive damages because of their deterrent purpose. Kunstler, 914 F.2d at 524. It should be the sanctioned party’s burden to show ability or inability to pay. Id.
The last step is to consider other factors, such as the ABA standards set forth by the majority in its opinion. Id. at 524-25; White, 908 F.2d at 685. I believe these four steps should be followed by a court when it awards sanctions under rule 1.413(1).
An examination of the district court’s thought process in awarding the sanction reveals it failed to follow any of these steps when it awarded the sanction. The district court acknowledged “Humphreys would have had to defend against the fraudulent misrepresentation claim in any event,” but failed to determine the amount of fees actually expended by the defendant in defending the sanctionable claims. This is contrary to the first step in assessing a sanction.
The majority makes the same error by not determining what fees are attributable to the sanctioned conduct. How much time could the defendant have expended getting claims such as negligent misrepresentation dismissed? I say not much. The court should have requested the defendant to produce records of time and expenses spent only attributable to the sanctioned conduct. Upon the filing of an affidavit setting forth the party’s time and expenses the court could review such an affidavit, as is done in any other case, to determine a fair and reasonable fee for the sanctioned conduct.
The district court and the majority do not apply steps two and three. The district court acknowledged in its ruling that the sanctioned party stated she did not have the ability to pay a large sanction. However, the district court and the majority fail to make any finding regarding her ability to pay. Furthermore, both the district court and the majority use sanctions as a fee-shifting device rather than as a deterrent.
Finally, the district court did not consider other factors in meting out its sanction. The majority and the district court narrowly focus on what sanction is needed to compensate rather than apply the four-step test. The majority’s failure to apply the four-step test and scrutinize the district court’s award of the sanction gives the district court unlimited power to craft a sanction without giving any explanation as to how it arrived at the amount. As one court aptly noted,
because “Rule 11 sanctions have significant impact beyond the merits of the individual case” and can affect the reputation and creativity of counsel, the abuse of discretion standard does not mean we give complete deference to the district court’s decision.
Bilharz v. First Interstate Bank of Wis., 98 F.3d 985, 989 (7th Cir.1996) (quoting Pac. Dunlop Holdings, Inc. v. Barosh, 22 F.3d 113, 118 (7th Cir.1994)).
Under the majority’s analysis, this court will never have a basis to overturn a district court’s award of sanctions. The factors used by the majority coupled with its *283nonexistent abuse of discretion standard can be used to support any award of sanctions.
It is standard practice for defendants to raise a myriad of defenses in their answers to petitions. These defenses include failure to state a cause of action, statute of limitation defenses, laches, estoppels, comparative fault, assumption of the risk, failure to mitigate damages, unreasonable failure to avoid injury, or misuse. Many times defendants raise these defenses without factual support. If we abide by the majority’s analysis in its review of the district court, the attorneys that raise these defenses without support should be sanctioned, and that sanction would be un-reviewable.
I suspect when a party requests sanctions this court will not overturn a substantial award of sanctions if the nonsane-tioned party can submit records justifying the work it did in pursuing its claim. I say this because the award of the sanction approved by the majority has no relationship to the time actually spent by the defendant in dealing with the sanctioned conduct. If it takes $25,000 to deter a solo practitioner from filing frivolous claims, then is $150,000 enough to deter a fifty-person law firm from filing frivolous claims?
Therefore, I would find the district court abused its discretion by: (1) not determining the time spent by the defendant to defend against the sanctioned activity; (2) not determining the minimum amount needed to deter the conduct; (3) not determining the ability of the sanctioned party to pay; and (4) not considering other factors as set forth in the ABA standards. I would sustain the writ and remand the case to the district court to determine the proper sanction in light of the test I have set forth in this dissent. Maybe the sanction is too low, too high, or just right. However, without a principled analysis by the district court supported by substantial evidence, I can only conclude it abused its discretion in making this award. See State v. Millsap, 704 N.W.2d 426, 432 (Iowa 2005) (holding a court abuses its discretion when it bases its decision on untenable grounds or it acts unreasonably. A ground or reason is untenable when it is based on an erroneous application of law or when it is not supported by substantial evidence.).
HECHT, J., joins this dissent.

. In 1993, Federal Rule of Civil Procedure 11 was amended. Rule 11(c) now provides:
(c) Sanctions.
(1) In General. If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. Absent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee.
(2) Motion for Sanctions. A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b). The motion must be served under Rule 5, but it must not be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets. If warranted, the court may award to the prevailing party the reasonable expenses, including attorney's fees, incurred for the motion.
(3) On the Court's Initiative. On its own, the court may order an attorney, law firm, or party to show cause why conduct specifically described in the order has not violated Rule 11(b).
(4) Nature of a Sanction. A sanction imposed under this rule must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated. The sanction may include nonmonetary directives; an order to pay a penalty into court; or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of part or all of the reasonable attorney’s fees and other expenses directly resulting from the violation.
(5) Limitations on Monetary Sanctions. The court must not impose a monetaiy sanction:
(A) against a represented party for violating Rule 11(b)(2); or
(B) on its own, unless it issued the show-cause order under Rule 11(c)(3) before voluntary dismissal or settlement of the claims made by or against the party that is, or whose attorneys are, to be sanctioned.
(6) Requirements for an Order. An order imposing a sanction must describe the sanctioned conduct and explain the basis for the sanction.
Fed.R.Civ.P. 11(c). This amendment incorporates the principle that a sanction should be the least severe sanction adequate to deter a party from filing frivolous pleadings. Id. r. 11(c)(4). The amendment also requires the court to explain the basis for a sanction. Id. r. 11(c)(6). As I point out later in this dissent, neither the district court nor the majority explained the basis for its sanction.