Court Opinion

ID: 170055
Source: CourtListenerOpinion
Date Created: 2010-08-14 17:57:23+00
Date Added: 2024-06-11T17:25:05.323700
License: Public Domain

FILED
                                                               United States Court of Appeals
                                                                       Tenth Circuit

                                                                    December 7, 2007
                      UNITED STATES COURT OF APPEALS Elisabeth A. Shumaker
                                                                       Clerk of Court
                                 TENTH CIRCUIT

 RICHARD EBERLY; PATRICIA
 EBERLY,

                Plaintiffs,                               No. 06-2337
                                                       (D. New Mexico)
          v.                                    (D.C. No. CIV-04-977-WJ/RLP)

 CARL MANNING; LEE ZILLHART;
 MARTHA ZILLHART; CHRISTINA A.
 WIELAND,

                Defendants - Appellees,
          and

 MAGELLA MANNING; ZUNI
 MOUNTAIN, LTD., a New Mexico
 Limited Partnership; LORENZO
 SANCHEZ,

                Defendants,

 WILLIAM G. STRIPP,

                Attorney - Appellant.

                              ORDER AND JUDGMENT *

      *
        This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
Before MURPHY, BRORBY, and McCONNELL, Circuit Judges.

      After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

I. Introduction

      This appeal challenges sanctions imposed on plaintiffs’ counsel pursuant to

28 U.S.C. § 1927. Attorney William Stripp appeals the district court’s award of

fees in the amount of $15,000 against him and in favor of the defendants. Taking

jurisdiction under 28 U.S.C. § 1291, this court AFFIRMS the district court’s

order granting in part defendants’ motion for § 1927 attorney’s fees.

II. Background

      This diversity suit arises out of a contested easement that runs through the

plaintiffs’ land and is used by the defendants to access their land. Plaintiffs,

Richard and Patricia Eberly, claimed the defendants, Carl Manning, Magella

Manning, Christina Wieland, Martha Zillhart and Lee Zillhart, were trying to

drive them off their land and filed a complaint alleging trespass, conversion, and

prima facie tort. 1 The district court granted the defendants’ motion for summary

      1
          In the same complaint, plaintiffs filed a fraud claim against Lorenzo
                                                                         (continued...)

                                           -2-
judgment, 2 finding the easement was valid and resolving all claims in favor of the

defendants.

       In its opinion granting summary judgment to the defendants, the district

court noted it was difficult to determine the undisputed facts because the

plaintiffs changed their version of the facts in light of the defendants’ arguments.

The district court explained at different times in the litigation the plaintiffs argued

the easement did not exist; was no longer valid if it did exist; or it was not

accurately depicted if did exist and was valid. The district court found the

plaintiffs created “sham disputes” in arguing the road on which the defendants’

alleged trespass and conversion took place was different from either the original

dirt road or the road reserved as an easement, because the undisputed facts clearly

indicated otherwise. The district court noted in addition to shifting their factual

positions, the plaintiffs also shifted the legal positions on which they based the

litigation.

       1
        (...continued)
Sanchez and Zuni Mountain Ltd. relating to their actions in selling plaintiffs the
land. The claims against Sanchez and Zuni Mountain were dismissed by the
district court without prejudice at the request of the plaintiff. For the purposes of
this appeal, the substance of these claims is irrelevant.
       2
       The claims against Christina Wieland and Magella Manning were
dismissed with prejudice for insufficiency of process. The claims against Carl
Manning, Martha Zillhart and Lee Zillhart were resolved in defendants’ favor on
summary judgment.

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      After the district court granted summary judgment, the defendants filed a

motion for sanctions under Federal Rule of Civil Procedure 11 and a motion for

attorney fees pursuant to 28 U.S.C. § 1927. 3 The district court denied the motion

for Rule 11 sanctions, but partially granted the defendants’ motion for § 1927

fees. In reaching its conclusion, the district court found plaintiffs’ counsel,

William Stripp, seemed to have ignored evidence which repudiated his clients’

claims early on in the litigation. The district court also found it was likely the

claims brought against Wieland, who had not entered the property since 2001, the

year the trespass was alleged to have begun, were asserted to harass and pressure

the other defendants. 4

      The court found the only real dispute in the case was the validity of the

easement, which plaintiffs knew about from the time they purchased the property

in 1993. Had counsel conducted a proper investigation of the facts and the law,

this would have been obvious. In fact, the district court pointed to evidence

indicating Stripp was most likely on notice that the facts did not support his

clients’ claims. The district court also pointed to plaintiffs’ tendency to shift

legal positions in order to withstand defendants’ motions to dismiss. The court

noted the plaintiffs made “absurd” arguments in attempts to avoid dismissal. For

      3
      Carl Manning, Martha Zillhart, and Lee Zillhart were parties to the Rule
11 motion. Carl Manning, Christina Wieland, Martha Zillhart, and Lee Zillhart
were parties to the 28 U.S.C. § 1927 motion.
      4
          Martha Zillhart and Carl Manning are Wieland’s children.

                                          -4-
example, the plaintiffs argued the defendants were trespassing whether or not they

stayed within the easement area marked on the subdivision plat. Also, plaintiffs

vacillated on whether they would dispute the existence of the easement in this

lawsuit, a critical factual element of the case.

         The district court awarded sanctions against Stripp in the amount of

$15,000. Stripp now appeals the order of the district court.

III. Discussion

A. Jurisdiction

         The district court had jurisdiction in this diversity matter pursuant to 28

U.S.C. § 1332(a)(1) and this court has appellate jurisdiction pursuant to 28 U.S.C.

§ 1291. A sanction order against an attorney is not a final judgment when the

underlying controversy remains unresolved and, therefore, cannot trigger

appellate jurisdiction under § 1291. G.J.B. & Assocs., Inc. v. Singleton, 913 F.2d

824, 827 (10th Cir. 1990). We note that some claims were dismissed in the

district court without prejudice, which in some cases would render the judgment

not final and not appealable. Heimann v. Snead, 133 F.3d 767, 769-70 (10th Cir.

1998).

         The judgment at issue here, however, is final for the purposes of § 1291.

The parties dismissed without prejudice, Lorenzo Sanchez and Zuni Mountain

Ltd., are not parties to this appeal and did not bring a motion for sanctions. There

are no unresolved claims between the parties to this appeal. Cf. id (holding where

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counterclaims were dismissed without prejudice, the judgment of the district court

was not final). In addition, plaintiffs’ claims against Sanchez and Zuni Mountain,

while arising out of the same plot of land, are not related to the claims against the

parties to this appeal. There is also no evidence the parties conspired to create

appellate jurisdiction. See id. at 769 (“Parties may not confer appellate

jurisdiction upon us by obtaining a voluntary dismissal without prejudice of some

claims so that others may be appealed.”). As a result, this case is sufficiently

distinguishable from Heimann. The judgment of the district court is final and this

court has jurisdiction over this appeal pursuant to 28 U.S.C. § 1291.

B. Section 1927 Sanctions

      Twenty-eight U.S.C. § 1927 provides, “[a]ny attorney . . . who so

multiplies the proceedings in any case unreasonably and vexatiously may be

required by the court to satisfy personally the excess costs, expenses, and

attorneys’ fees reasonably incurred because of such conduct.” Sanctions are

appropriate when an attorney acts recklessly or with indifference to the law; is

cavalier or bent on misleading the court; intentionally acts without a plausible

basis; or when the entire course of the proceedings is unwarranted. Steinert v.

Winn Group, Inc., 440 F.3d 1214, 1221 (10th Cir. 2006). We consider an

attorney’s actions under the standard of objective bad faith. Braley v. Campbell,

832 F.2d 1504, 1512 (10th Cir. 1987) (en banc). A district courts’s award of §

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1927 fees is reviewed for abuse of discretion, but any statutory interpretation or

other legal analysis is reviewed de novo. Steinert, 440 F.3d at 1221.

1. Sanctions Based on Filing the Complaint

      Stripp contends that the district court improperly based its imposition of

sanctions on the initial filing of the complaint in federal court. Section 1927

“necessarily excludes the complaint that gives birth to the proceedings, as it is not

possible to multiply proceedings until after those proceedings have begun.”

Steinert, 440 F.3d at 1225. We find no basis for Stripp’s contention. The district

court explicitly rejected the defendants’ argument that sanctions were warranted

based on the plaintiffs’ assertion of federal jurisdiction. Instead, the district court

explained its decision was based on counsel’s behavior during the proceedings,

which is a proper basis for § 1927 sanctions.

2. Basis for § 1927 Sanctions

      Stripp next argues there was no evidence of unreasonable or vexatious

behavior warranting the imposition of sanctions and the district court failed to

adequately explain what behavior constituted the basis for its award of sanctions.

We cannot agree that the district court abused its discretion in finding adequate

justification for the imposition of sanctions.

      In its opinion, the district court discussed specific conduct justifying

sanctions and explained how those actions unreasonably multiplied and increased

the costs of the proceedings. As explained in the Memorandum Opinion and

                                          -7-
Order on Motions for Sanctions and Attorney’s Fees, the court gave examples of

the shifting positions adopted by the plaintiffs in order to avoid summary

judgment, which increased costs to the defendants who had to respond to the

changing arguments. For example, when the defendants argued the district court

lacked subject matter jurisdiction because plaintiffs failed to exhaust their

administrative remedies on the subject of the easement’s validity, the plaintiffs

changed their position and argued the defendants had trespassed outside the

easement boundaries. In response to a later motion for summary judgment, the

plaintiffs sought dismissal without prejudice because they had determined the cost

of proceeding with the litigation would outstrip the value of the land, a fact that

should have been readily apparent earlier in the proceedings.

       The district court also provided examples of “sham disputes” manufactured

by the plaintiffs, which increased costs to the defendants who had to respond to

the disputes. For example, the plaintiffs placed significant emphasis on the

defendants’ widening of a pre-existing road to thirty feet, when it was undisputed

that the road easement was forty feet. Further, plaintiffs alleged defendants

trespassed regardless of whether they were within the easement and vacillated on

whether they would dispute the existence of the easement, the only real issue in

the lawsuit. The district court found these tactics unnecessarily prolonged the life

of this case.

                                          -8-
      The district court’s decision explains that all claims in this dispute were

predicated on whether the easement was valid. The aforementioned tactics were

designed to obfuscate this core issue. This occurred even though, according to

the district court’s finding, the plainitffs’ knew about the existence of a valid

easement at the time they purchased the land. When an attorney pursues meritless

claims, the course of the proceedings is unwarranted and sanctions are justified.

Dominion Video Satellite, Inc. v. Echostar Satellite L.L.C., 430 F.3d 1269, 1278-

79 (10th Cir. 2005) This court concludes the imposition of sanctions under §

1927 was not an abuse of discretion.

3. Specificity of Findings Regarding the Amount of Sanctions

      Finally, Stripp argues the district court abused its discretion in awarding

the amount of $15,000 because it failed to provide adequate specificity in its

findings. In order to impose sanctions, a district court must make findings

sufficient to “(1) identify the excess costs providing a basis for the sanctions; (2)

identify the conduct leading to the sanctions in order to provide notice and to

allow a meaningful response from the sanctioned attorney; and (3) identify for the

reviewing court the reason for the sanction.” Sally Beauty Co., Inc. v. Beautyco,

Inc., 372 F.3d 1186, 1190 (10th Cir. 2004).

      The defendants requested a total of $32,457.50 in attorneys fees for 235.2

hours of work that counsel expended in this matter. The district court determined

that although the fee charged by the defendant’s attorney was reasonable, a lower

                                          -9-
number of hours expended seemed more reasonable given the complexity of the

matter and awarded $15,000. Although the district court did not itemize its

deductions, “[a] general reduction of hours claimed in order to achieve what the

court determines to be a reasonable number is not an erroneous method.” Mares

v. Credit Bureau of Raton, 801 F.2d 1197, 1203 (10th Cir. 1986). The district

court, therefore, did not abuse its discretion in choosing to set fees at $15,000.

      Furthermore, the district court adequately explained the costs associated

with the sanctionable conduct. As explained, supra, the district court discussed

the specific conduct justifying sanctions, and the excess costs associated with the

conduct. Specifically, it noted counsel’s tactics unnecessarily prolonged the case

and therefore increased associated costs. “[W]hen the context for the assignment

of costs is clear, and the justification for the imposition of costs is included in the

record . . . more specific findings are not required.” Sally Beauty Co., 372 F.3d at

1190. The district court met this standard and, as a result, we cannot say that the

district court abused its discretion.

                                          -10-
IV. Conclusion

     The judgment of the United States District Court of New Mexico is

AFFIRMED.

                                            ENTERED FOR THE COURT

                                            Michael R. Murphy
                                            Circuit Judge

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