Court Opinion

ID: 3158357
Source: CourtListenerOpinion
Date Created: 2015-11-26 01:00:49.862429+00
Date Added: 2024-06-11T11:57:32.664227
License: Public Domain

Case: 14-11249        Document: 00513286098       Page: 1    Date Filed: 11/25/2015

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                      No. 14-11249                       United States Court of Appeals
                                                                                  Fifth Circuit

                                                                                FILED
SHERYL BARRETT-BOWIE,                                                   November 25, 2015
                                                                           Lyle W. Cayce
              Plaintiff,                                                        Clerk

v.

SELECT PORTFOLIO SERVICING, INCORPORATED,

              Defendant – Appellee,

v.

J.B. PEACOCK, JR.; GAGNON, PEACOCK & VEREEKE, P.C.,

              Appellants.

                   Appeal from the United States District Court
                        for the Northern District of Texas
                             USDC No. 3:12-CV-4343

Before DAVIS, ELROD, and HAYNES, Circuit Judges.
PER CURIAM:*
       J.B. Peacock, Jr. and Gagnon, Peacock & Vereeke, P.C. appeal the
district court’s Rule 11 sanction order reprimanding them for submitting

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
     Case: 14-11249      Document: 00513286098        Page: 2    Date Filed: 11/25/2015

                                     No. 14-11249
pleadings that contained factual allegations that Appellants knew were false.
Because the district court did not abuse its discretion in determining that
Appellants had not withdrawn the false allegations, we AFFIRM.
      Appellants represented Plaintiff Sheryl Barrett-Bowie in a lawsuit
seeking to avoid eviction following foreclosure on Barrett-Bowie’s home. 1 After
a series of assignments and indorsements, Barrett-Bowie’s mortgage note had
been indorsed to PNC Bank, NA, with Select Portfolio Servicing, Inc. (Select
Portfolio) acting as the loan servicer. In this suit, Barrett-Bowie alleged, inter
alia, claims for unreasonable debt collection, violation of the Texas Debt
Collections Practices Act, and negligent misrepresentation.                These three
claims—referred to by the parties as the “show-me-the-note” claims—were
premised in part on allegations that Select Portfolio and PNC Bank had not
adequately proved that PNC Bank was the noteholder.
      During the discovery conference, an attorney representing Select
Portfolio showed an attorney employed by Gagnon, Peacock & Vereeke, P.C.
(the Firm) the original blue ink note signed by Barrett-Bowie. The Firm’s
attorney acknowledged that the note was indorsed from the original lender to
First Franklin Financial Corporation and from First Franklin Financial
Corporation to PNC Bank. The Firm’s attorney retained a copy of the original
note and reported what she had seen to her colleagues at the Firm.
Nevertheless, after the discovery conference, Peacock signed and filed two
amended complaints alleging that PNC Bank did not own or hold the note.
      Select Portfolio moved for summary judgment on all of Barrett-Bowie’s
claims, arguing, among other things, that Barrett-Bowie’s show-me-the-note
claims failed because the note was “indorsed to PNC in an unbroken chain of

      1 This lawsuit followed two separate post-foreclosure state court suits and Barrett-
Bowie’s Chapter 7 bankruptcy proceedings.
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                                 No. 14-11249
indorsements from the original lender.” The motion for summary judgment
argued that Sentry Portfolio had shown Appellants the note on multiple
occasions and that Barrett-Bowie admitted that PNC Bank was the noteholder
but had not amended or dismissed any claims based on its contention to the
contrary. In Barrett-Bowie’s response, Appellants did not specifically address
the show-me-the-note claims, but argued that “[s]ummary judgment is
improper in this case because there are genuine issues of material fact on
elements in each of Plaintiff’s remaining causes of action” and urged that the
motion for summary judgment be denied “in its entirety.”
      After Appellants filed their response but before the district court ruled
on the motion for summary judgment, Select Portfolio served Appellants with
a copy of its proposed motion for Rule 11 sanctions based in part on Appellants’
continuing to allege the frivolous show-me-the-note claims after having seen
the original note.   Appellants responded to Select Portfolio that they had
voluntarily withdrawn the show-me-the-note claims by not addressing them in
their opposition to Select Portfolio’s summary judgment motion. At no time
before Select Portfolio filed its sanctions motion, however, did Appellants
represent to the district court that they were withdrawing the show-me-the-
note claims.
      Sentry Select filed its Rule 11 motion for sanctions, which the district
court granted in accordance with the magistrate judge’s recommendation. The
district court reprimanded Appellants “for filing pleadings containing baseless
factual allegations,” and admonished them to refrain from engaging in such
conduct in the future. The district court also denied Appellants’ subsequent
motion for reconsideration. This appeal followed.
      We review the district court’s imposition of sanctions under Rule 11 for
abuse of discretion. Marlin v. Moody Nat. Bank, N.A., 533 F.3d 374, 377 (5th
Cir. 2008). Rule 11 provides that by signing and submitting a pleading to the
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                                     No. 14-11249
court, an attorney represents that, among other things, “the factual
contentions have evidentiary support or, if specifically so identified, will likely
have evidentiary support after a reasonable opportunity for further
investigation or discovery.” Fed. R. Civ. P. 11(b)(3). The moving party must
serve the non-moving party with a proposed motion for sanctions at least
twenty-one days before filing it with the court, and the motion may not be filed
if the non-moving party withdraws or corrects the challenged claim during that
“safe harbor” period. Fed. R. Civ. P. 11(c)(2); Elliott v. Tilton, 64 F.3d 213, 216
(5th Cir. 1995). “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.” Fed. R. Civ. P. 11(c)(4).
      It is undisputed that Appellants filed two amended pleadings alleging
that PNC Bank did not own or hold the note after Appellants had seen the
original note indorsed to PNC Bank. 2 Accordingly, the district court did not
abuse its discretion in determining that Appellants violated Rule 11.
      However, Appellants dispute the district court’s finding that Appellants
had not affirmatively withdrawn the show-me-the-note claims during the “safe
harbor” period. Appellants argue that they abandoned the show-me-the-note
claims by not making specific arguments in defense of those claims as part of
their opposition to Select Portfolio’s motion for summary judgment. Appellants
cite no authority for the proposition that abandoning a claim for summary
judgment purposes is the equivalent of withdrawing or correcting the claim
under Rule 11. Regardless, Appellants in this case did not merely fail to
affirmatively indicate to the district court that they intended to withdraw the

      2 Appellants argue that the law at the time they filed the pleadings supported their
argument that the note was unenforceable, but the enforceability of the note as a matter of
law does not impact PNC’s undisputed ownership of the note, which Appellants’ pleadings
denied.
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                                      No. 14-11249
show-me-the-note claims; they also urged the court to deny Select Portfolio’s
motion “in its entirety” and argued that genuine issues of material fact existed
“on elements in each of Plaintiff’s remaining causes of action.” Although on
this record the district court could have determined that Appellants acted in
good faith, believing they had withdrawn their baseless show-me-the-note
claims, 3 the district court did not abuse its discretion in finding that Appellants
had not withdrawn the claims before Select Portfolio filed its Rule 11 motion
for sanctions.
       Because the district court did not abuse its discretion in granting Select
Portfolio’s motion for sanctions, we do not reach Appellants’ challenge to the
district court’s inherent power to issue the sanctions sua sponte.
       We AFFIRM.

       3We note also that the record—particularly Select Portfolio’s delivery of the proposed
Rule 11 motion to Appellants one day before mediation and Appellants’ letter in response
threatening a counter-motion for sanctions—supports the inference that both sides engaged
in gamesmanship.
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