Court Opinion

ID: 1022657
Source: CourtListenerOpinion
Date Created: 2013-07-04 23:25:43.259808+00
Date Added: 2024-06-11T09:14:08.293180
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 05-1380

RODNEY RAY SWEETLAND, III,

                                                          Appellant,

           and

EARLE E. AUSHERMAN; STEPHANIE BALL; RHODA
BROWN; WILLIAM CLOSE; RICARDO COLON; FRANK
COLLINS; KIRK DECOSMO; JOHN ELDER; ANNA
HAMILTON; PAUL SIMONS; ARLEN SLOBODOW; DEBORAH
STEELMAN; GUY THOMAS; LUDMILLA WERBOS; PAUL
WERBOS; RONNIE C. HOGUE; SHAUNA HUNTER; LESLIE
JONES; NEIL KRAMER; RICHARD L. LAMMONDS; KENT
LINDUFF; CHARLES PARK; BENJAMIN SALAZAR;
SHERWOOD SCHWARZ,

                                                         Plaintiffs,

           versus

BANK OF AMERICA CORPORATION, a/k/a Banc of
America, d/b/a Bank of America Auto,

                                              Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore. Marvin J. Garbis, Senior District Judge.
(CA-01-438-MJG)

Argued:   January 30, 2007                   Decided:   May 22, 2007

Before MOTZ, TRAXLER, and KING, Circuit Judges.
Affirmed in part, reversed in part, and remanded by unpublished per
curiam opinion.

ARGUED: Rodney R. Sweetland, III, Washington, D.C., for Appellant.
Ava Elaine Lias-Booker, MCGUIREWOODS, L.L.P., Baltimore, Maryland,
for Appellee.     ON BRIEF: Todd Gustin, MCGUIREWOODS, L.L.P.,
Baltimore, Maryland, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

       Appellant Rodney R. Sweetland appeals the district court’s

award of attorneys’ fees against him pursuant to 28 U.S.C.A. § 1927

(West 2006), in connection with an action he filed as counsel for

the plaintiffs against Bank of America Corporation, Bank of America

Auto Finance Corporation (“BAAF”), John Doe I, and John Doe II,

alleging violations of the Fair Credit Reporting Act (the “FCRA”),

15 U.S.C.A. § 1681 et. seq. (West 1998 & Supp. 2006), and analogous

state law.      We affirm in part, reverse in part, and remand.

                                     I.

       Many of the underlying facts in this case are set forth in our

previous opinion in Ausherman v. Bank of America Corp., 352 F.3d

896 (4th Cir. 2003).      For purposes of this appeal, an abbreviated

version will suffice.

       In February 2001, Sweetland brought an action on behalf of

plaintiff Ausherman and others against Bank of America and BAAF,1

alleging that they willfully or negligently violated the FCRA and,

in particular, the provision that “[a] person shall not use or

obtain a consumer report for any purpose” not authorized under the

Act.       15 U.S.C.A. § 1681b(f).   Sweetland initiated the action on

behalf of the plaintiffs after learning that a subscriber code

       1
      Unless otherwise indicated, we hereafter refer to the Bank of
America defendants collectively as “BAAF”.

                                     3
assigned by Trans Union Corporation (a consumer credit reporting

agency)      to   Oxford    Resources       Corporation    (a   company    that   had

recently merged with and been integrated into BAAF) had been used

to improperly obtain the plaintiffs’ credit reports.                      The action

against Bank of America and BAAF was premised upon the allegation

that John Doe I, an unidentified employee of BAAF, had used the

code to obtain the plaintiffs’ credit reports without an authorized

purpose and provided them to John Doe II, an unidentified co-

conspirator of John Doe I.

       In    response      to   the    lawsuit,     BAAF   conducted      tests   and

examinations which purportedly demonstrated that the subscriber

code   had    never     been    used   on    the   integrated    BAAF   systems    or

computers, indicating that the origin of the improper use was not

a BAAF employee. For their part, the plaintiffs likewise failed to

uncover any admissible evidence to support their allegation that

the code was used by a BAAF employee to obtain the plaintiffs’

credit reports, or any other information which would explain who

obtained the reports or how they were obtained.                 In sum, Sweetland

was unsuccessful in his efforts to identify the John Doe defendants

or to tie those defendants to BAAF.                  There being no “‘evidence

whatsoever of knowing, intentional, or willful’ FCRA violations by

either BAAF or any of its employees,” the district court granted

summary judgment to BAAF, and we affirmed.                 Ausherman, 352 F.3d at

900.

                                             4
     Shortly      thereafter,    BAAF   pursued    a    motion    for   sanctions

against plaintiffs and Sweetland, including a motion for attorneys’

fees under 28 U.S.C.A. § 1927 in the total amount of $85,708.2

Specifically, BAAF sought reimbursement for (1) $71,877.00 in

attorneys’ fees incurred in responding to plaintiffs’ motion for

partial summary judgment and plaintiffs’ opposition to BAAF’s

motion for summary judgment; and (2) $13,831 in attorneys’ fees

incurred    in    responding    to   plaintiffs’       motion    to   recuse   the

magistrate judge assigned to oversee discovery matters in the case.

     The district court granted the motion for attorneys’ fees with

regard to both filings.         However, applying the twelve factors set

forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714

(5th Cir. 1974), and employing a line-by-line analysis of the bill,

the district court reduced the $85,708 by $16,772, for a total of

$68,936.    The court then addressed Sweetland’s ability to pay the

sanction, and further reduced the award to $50,000, plus judgment

interest.        Finally, the district court afforded Sweetland the

opportunity to satisfy the judgment in full by making payments of

$500 per month for 60 months, beginning in March 2005, for a total

of $30,000.       As a result, the district court noted that granting

sanctions on the motion to recuse had “no practical effect” because

     2
      BAAF also requested attorney’s fees under the FCRA, see 15
U.S.C.A. §§ 1681n(c), 1681o(b) (West 1998), and the court’s
inherent authority, which were denied by the district court. BAAF
has filed no cross-appeal from this denial.

                                        5
the total award of $50,000 would be the same even if there had been

no separate award for the recusal matter.    J.A. 444.3

                                II.

     As we have previously noted, “[a] lawyer must always remember

that he is an officer of the court,” and, while “[h]e may zealously

represent his client,” he must do so “only within the bounds of 28

U.S.C. § 1927.”   Blair v. Shenandoah Women’s Ctr., Inc., 757 F.2d

1435, 1438 (4th Cir. 1985).    Section 1927 of Title 28 provides

that:

     [a]ny attorney or other person admitted to conduct cases
     in any court of the United States or any Territory
     thereof 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.

28 U.S.C.A. § 1927 (emphasis added).        The statute “imposes a

continuing obligation in the conduct of litigation.”      Brubaker v.

City of Richmond, 943 F.2d 1363, 1382 n.25 (4th Cir. 1991).

Attorneys must not multiply proceedings through unreasonable and

vexatious conduct and, as we have noted, “a finding of counsel’s

bad faith [is] a precondition to the imposition of fees” under the

     3
      At oral argument, Sweetland represented to this court that he
began making the $500 per month payments to satisfy the judgment
and agreed that there would be no monetary effect and no further
proceedings necessary if we affirm the sanction as it pertains to
the summary judgment proceedings, but reverse the sanction as it
pertains to the recusal motion.

                                 6
provision.     Id. at 1383 n.25.        A district court’s grant of

sanctions under the provisions of § 1927 is reviewed for an abuse

of discretion.   See Chaudhry v. Gallerizzo, 174 F.3d 394, 410 (4th

Cir. 1999).

                                   A.

     We begin with Sweetland’s challenge to the district court’s

award of attorneys’ fees associated with the summary judgment

proceedings which took place below.     In doing so, we review in more

detail the events leading up to Sweetland’s initiation of this

portion of the proceedings.

                                   1.

     The Amended Complaint in this action was filed in August 2001,

and the matter was referred to a magistrate judge for discovery.

Count I of the Amended Complaint alleges that John Doe I, acting as

an agent or employee of BAAF and “in the course and scope of his

employment     knowingly    wilfully    and   intentionally   obtained

plaintiffs’ consumer reports under false pretenses” and “provided

the aforementioned consumer reports to” John Doe II, in violation

of the FCRA.   J.A. 46.    Sweetland did not know the identity of John

Doe I or John Doe II when he filed the Amended Complaint, and

BAAF’s internal investigation failed to uncover any BAAF employee

who used the code.

     The parties thereafter embarked upon a period of contentious

discovery, during which Sweetland persistently refused to provide

                                    7
information to substantiate his claims.    Unsuccessful in obtaining

any factual basis for the allegations through more customary

discovery avenues, BAAF filed a motion to compel Sweetland’s

deposition on April 11, 2002, which was initially denied pending

revisions to the discovery schedule.      In the meantime, Sweetland

advised defense counsel in a settlement memorandum dated April 24,

2002, that a third individual, whom he referred to as John Doe III,

was the “kingpin of the network,” and that Sweetland had taken

steps to ascertain his identity after Sweetland’s deposition had

been taken.   J.A. 427.   Sweetland also advised defense counsel

that, “once he provided them with the identity of [John Doe III],

‘it will be relatively easy to unravel the situation.’”    J.A. 428.

     On May 17, 2002, in the midst of the contentious discovery

over Sweetland’s failure to identify any of the three John Does or

substantiate any relationship they might have with BAAF, Sweetland

took the extraordinary step of filing a motion for partial summary

judgment as to Count I of the Amended Complaint.           As later

determined by the district court, Sweetland had no factual basis

for pursuing Count I at that point and filed the motion even though

he had still not ascertained the identity of any of the John Does

or connected them to BAAF.

     In response, BAAF renewed its motion to depose Sweetland,

which was granted by the magistrate judge. The time for responding

to the summary judgment motion was also stayed.       By this time,

                                8
Sweetland had persistently refused to provide discovery to which

BAAF was entitled, despite having been ordered to do so by the

court.    As summarized by the district court:

      Plaintiffs refused to disclose to [BAAF] factual
      information supporting their claims and eventually were
      sanctioned $3000 for their failure to provide signed and
      sworn answers to interrogatories.      Sweetland himself
      failed to answer completely and non-evasively ten
      interrogatories propounded upon him by [BAAF] as ordered
      by the Court, which resulted in Judge Grimm ordering that
      Sweetland be deposed.

 J.A. 427 (internal citation omitted).

      Several days after the deposition of Sweetland was ordered,

Sweetland filed a motion for leave to file an amended complaint

which added class action allegations and removed the John Doe

allegations.     Sweetland did not, however, withdraw the motion for

partial summary judgment as to Count I, which was based on the John

Doe allegations.

      On June 11, 2002, Sweetland’s deposition was taken.              During

the   deposition,   Sweetland   admitted   that   he   did    not   know    the

identity of John Doe I or II, had lied about his ability to

identify John Doe III, and had made no confidential arrangements

for ascertaining his identity as he had represented to defense

counsel.    According to Sweetland, this “‘language [was] put there

for the purposes of settlement bluster.’” J.A. 428; he “‘wanted to

make the representation, for the purposes of maximizing my clients’

settlement position’” during the negotiations.             J.A. 428.       As a

result,    the   magistrate   judge   imposed   monetary     sanctions     upon

                                      9
Sweetland in the amount of $8,649.25, for the costs incurred in

connection with the motions to compel Sweetland’s deposition and

the taking of the deposition.

       Because Sweetland had still not withdrawn the motion for

partial summary judgment as to Count I, BAAF thereafter filed a

response to Sweetland’s motion, along with a cross motion for

summary judgment as to Count I as well as the nine additional

counts set forth in the Amended Complaint.           The district court

denied plaintiffs’ motion and granted BAAF’s motion.       We affirmed.

                                   2.

       Sweetland now contests the district court’s subsequent award

of attorneys’ fees incurred by BAAF in connection with the motions

for summary judgment as a sanction under § 1927.                Sweetland

contends that the district court abused its discretion in awarding

this    sanction   because   his   initiation   of    summary   judgment

proceedings and his response to BAAF’s motion should not be viewed

as an unreasonable and vexatious multiplication of the proceedings

within the meaning of the statute.      We disagree.

       As noted by the district court, BAAF could not be held liable

under Count I for the actions of John Doe I unless plaintiffs

produced evidence that John Doe I was a BAAF employee acting within

the scope of his employment.         However, “[a]t no time in the

proceedings did Sweetland have any factual basis for pursuing Count

                                   10
I of the Amended Complaint against BAAF, the count for which

Plaintiffs filed for summary judgment.” J.A. 440.

      Although it will be the unusual case in which the filing of a

motion for summary judgment alone would constitute an unreasonable

and vexatious multiplication of proceedings warranting a finding of

bad faith, we cannot say that the district court abused its

discretion here.    It is apparent that throughout this litigation,

Sweetland pursued plaintiffs’ claims well after he knew that

evidentiary support for the allegations would not be forthcoming.

But   more   importantly,   Sweetland   did   not   simply   maintain   the

proceedings in the hope of uncovering some connection between the

alleged John Does and BAAF.        On the contrary, Sweetland took

affirmative steps to stall the discovery process through evasive

and nonresponsive answers to the point that the magistrate judge

imposed monetary sanctions and ordered counsel to personally submit

to a deposition so that defendants could obtain the answers to

which they were entitled.        He then filed a motion for summary

judgment as to Count I, necessarily representing “that there [was]

no genuine issue as to any material fact” as to those allegations,

and “that [plaintiffs were] entitled to a judgment as a matter of

law.”   Fed. R. Civ. P. 56(c).   He did so, however, before the close

of discovery and without any evidence of the identities of the

alleged wrongdoers or their relationship to BAAF for purposes of

vicarious liability.    In sum, Sweetland took the affirmative step

                                   11
of filing a baseless summary judgment motion on a count he knew he

could not substantiate in the middle of the discovery process,

while at the same time seeking to “bolster” his case through

intentional misrepresentations for the purpose of obtaining a

settlement from the defendants.

        During this same time, Sweetland sought leave to file an

amended complaint to add class action allegations against the

defendants, which omitted the unsubstantiated John Doe allegations.

Yet,     despite     this       apparent     recognition        of   his   lack    of

substantiating       evidence      to     support    his   initial    allegations,

Sweetland did not withdraw the premature and baseless motion for

summary judgment that he had filed on the very count that rested

upon them.         As noted by the district court “[t]hese actions

needlessly multiplied the [summary judgment] proceedings at a time

when    Sweetland      should    have     been    withdrawing    counts    from   the

complaint based on the unrefuted and contradictory factual record.”

J.A. 441-42.       And, while we do not mean to suggest that Sweetland

would    have   been    required     at    that    point   to   formally   withdraw

allegations that he knew he could no longer support had he not

filed a motion for summary judgment which rested upon them, we

cannot say that the district court abused its discretion in finding

that Sweetland’s acts of filing and pursuing the motion for partial

summary judgment “multiplied the proceedings with conduct that can

be characterized as unreasonable and vexatious and that increased

                                           12
the cost of the proceedings.”   J.A. 442.   Accordingly, we affirm

the sanctions order insofar as it awards attorneys’ fees associated

with BAAF’s opposition to plaintiffs’ motion for summary judgment

as to Count I and response to plaintiffs’ opposition to BAAF’s

cross motion for summary judgment as to Count I.

                                B.

     We reach a different conclusion with regard to the district

court’s finding that Sweetland was appropriately sanctioned under

§ 1927 for filing the motion to recuse the magistrate judge.

     After Sweetland’s deposition was taken and the magistrate

judge imposed sanctions upon him for the costs associated with the

taking of the deposition, Sweetland discovered that Bank of America

held the mortgage on the magistrate judge’s principal residence and

he filed the motion to recuse the magistrate judge on this basis.

See 28 U.S.C.A. § 455(a) (West 2006) (requiring recusal when a

judge’s “impartiality might reasonably be questioned”).

     The magistrate judge denied the motion, holding that “[a]

routine debt like a mortgage, fully secured by real property of an

appraised value in excess of the debt, cannot be affected by the

outcome of litigation involving the bank that is a mortgagee.” See

Ausherman v. Bank of Am. Corp., 216 F. Supp. 2d 530, 533 (D. Md.

2002) (footnote omitted); id at 532 (noting that “[a] judge who is

indebted to a bank in a routine loan transaction is not thereby

disqualified from cases in which a bank is a party”) (quoting II

                                13
Guide to Judiciary Policies and Procedures, Compendium V-I, V-26 &

V-27) (2001) (emphasis removed)).         The district court agreed, and

we affirmed.   Ausherman, 352 F.3d at 899 n.2.

     Later, when the district court awarded sanctions against

Sweetland for filing the motion to recuse in the first place, the

district court acknowledged that there was no circuit precedent

addressing the issue of whether a judge’s impartiality could be

questioned where one of the litigants holds the mortgage on his

principal   residence   when   the   motion   was   filed.   However,    he

attributed the absence of precedent to the baseless nature of the

claim.   According to the district court, “[t]he mortgage issue

raised by Sweetland was so obviously meritless that no other

attorney has seen fit to raise the issue in any court.          The fact

that no one else had ever presented the baseless issue to any court

does not excuse Sweetland’s action.”           J.A. 443.      On appeal,

Sweetland asserts that sanctions were not warranted for filing the

motion to recuse because it was a question of first impression and

was not so “obviously meritless” at the time as to warrant a

finding that it ran afoul of his obligation not to multiply

proceedings with unreasonable and vexatious filings.         We agree.

     We can envision situations in which motions are filed which

are so baseless in fact and law as to be sanctionable under § 1927

as having been filed in bad faith, even though they are purportedly

grounded in novel theories of law.         However, Sweetland’s recusal

                                     14
motion does not fall into this category.               As recognized by the

district court (albeit in the context of evaluating the propriety

of the amount of legal fees warranted as a sanction), “the recusal

motion was based on a completely novel legal theory that had never

been addressed by any court” and, therefore, “require[d] more

research than called for by a question that has already been

addressed.”     J.A. 449.      Thus, it seems that BAAF did not view the

motion as so baseless that it need not treat it in a serious

manner. And, although we ultimately held that the motion to recuse

was without merit, see Ausherman, 352 F.3d at 899 n.2, we do not

view the basis for the motion to be so lacking in potential merit

at the time it was filed as to rise to the level of having been

filed in bad faith.

       In   conclusion,   we    are    sympathetic    to    the     understandable

frustrations of the court in the wake of the sanctionable conduct

and    meritless    filings    which    preceded     the    motion     to   recuse.

However, we do not view the record as supporting a determination

that    Sweetland     operated        outside   the        bounds     of    zealous

representation of his clients when he filed this particular motion

or that the motion was so beyond the pale as to be deemed filed in

bad faith for an unreasonable and vexatious purpose.                  Accordingly,

we hold that the district court abused its discretion in awarding

sanctions under § 1927 for the filing of that motion and reverse

the sanctions order as it relates to the motion to recuse.

                                        15
                                     C.

      Having determined that the district court did not abuse its

discretion in awarding sanctions under § 1927 for attorneys’ fees

incurred    in   connection   with   the    summary   judgment   proceedings

pertaining to Count I, but did abuse its discretion in awarding

sanctions under § 1927 for the recusal proceedings, we turn now to

the amount of the sanction imposed by the district court.

      As explained above, the district court employed a line-by-line

analysis of BAAF’s bill, initially reducing the amount of the

attorneys’ fees of $85,708 by $16,772. Of the $85,708, $71,877 was

represented to be for attorneys’ fees incurred in connection with

the summary judgment proceedings and $13,831 was represented to be

associated with BAAF’s responding to plaintiffs’ motion to recuse

the magistrate judge. The reduction involved approximately $13,820

for   the   summary    judgment   entries   and   $2,952   for   the   recusal

entries, for a total sanction of $68,936.

      Under the present order, the district court reduced the

$68,936 sanction to $50,000 (plus judgment interest) based upon

Sweetland’s ability to pay at the time, and further to $30,000

without     judgment   interest   contingent      upon   Sweetland’s   making

regular monthly payments, reductions which BAAF did not challenge

in the current appeal.      As noted by the district court, in light of

these reductions, the portion of the sanction attributable to

Sweetland’s pursuit of the magistrate judge’s recusal had no

                                     16
practical effect upon the final amount of the sanction because the

sanction already represented a more than $35,000 reduction in the

amount of the fees sought.      Our reversal of that portion of the

sanction would similarly have had no practical effect upon the

amount of the total sanction.

     On appeal, however, confusion arose as to whether the $71,877

in fees initially sought by BAAF for the summary judgment portion

of the request included entries for summary judgment proceedings

pertaining to counts separable from Count I and, more importantly,

whether and to what extent the district court’s initial sanction

award of $68,936 included amounts associated with time that BAAF

spent on tasks related to its filing for summary judgment as to the

other nine counts.      As a result, Sweetland has requested, as

alternative relief on appeal, that we vacate the amount of the

district   court’s   award   and    remand    for      reconsideration     and

recalculation of the award in light of our decision.

     Because   the   district   court    is   in   a   better   position   to

scrutinize the bills submitted and excise the attorneys’ fees, if

any, attributable solely to the other counts, we vacate the amount

of the present sanction and remand the matter to the district court

for rehearing, reconsideration and, if appropriate, recalculation

of the amount of the sanction in light of our decision and the

current posture of this case.      Although the amount of the sanction

rests in the district court’s proper exercise of its discretion on

                                    17
remand, including the amount of any reductions now appropriate,

Sweetland will be entitled to a credit for any payments he made

towards the vacated award.

                                III.

     For the foregoing reasons, we affirm the district court’s

finding that Sweetland is liable under § 1927 for fees associated

with BAAF’s opposition to plaintiffs’ motion for summary judgment

as to Count I and response to plaintiffs’ opposition to BAAF’s

cross motion for summary judgment as to Count I, but reverse the

district court’s finding that Sweetland is liable under § 1927 for

fees associated with his filing the motion to recuse the magistrate

judge.    However, we vacate the amount of the fees awarded for the

summary    judgment   proceedings     and   remand    for   rehearing,

reconsideration and, if appropriate, recalculation of the amount of

the sanction in accordance with this opinion.

                                                     AFFIRMED IN PART,
                                                     REVERSED IN PART,
                                                          AND REMANDED

                                 18