Court Opinion

ID: 2997603
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:37:44.744153+00
Date Added: 2024-06-11T11:45:34.567714
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

Nos. 04-2254 & 04-2968
U.S. BANK NATIONAL ASSOCIATION, N.D.,
                                                            Plaintiff,
                                 v.

MATTIE SULLIVAN-MOORE,
                                              Defendant-Appellee.

APPEAL OF:     FISHER & FISHER, P.C.

                          ____________
          Appeal from the United States District Court for
         the Northern District of Illinois, Eastern Division.
           No. 02 C 6024—George W. Lindberg, Judge.
                          ____________
    ARGUED JANUARY 11, 2005—DECIDED APRIL 27, 2005
                    ____________

  Before POSNER, MANION, and ROVNER, Circuit Judges.
  ROVNER, Circuit Judge. Fisher and Fisher, Attorneys at
Law, P.C. earns its bread and butter representing mortgage
companies and lending institutions in mortgage foreclosure
cases, creditor bankruptcies, evictions, real estate closings,
housing court, and housing related matters. By its own
description, it is a high volume operation, receiving 10,000
to 12,000 cases each year, 4,000 to 5,000 of which are new
foreclosure matters. The firm does not assign one attorney
2                                   Nos. 04-2254 & 04-2968

to handle a single case, but rather lawyers work on numer-
ous files on a daily basis and several attorneys may work on
any particular matter.
   This approach to its caseload may have exacerbated the
firm’s mishandling of a foreclosure action against Mattie
Sullivan-Moore, who has since died. Working on behalf of
U.S. Bank National Association, N.D., Fisher and Fisher
handled the foreclosure of Sullivan-Moore’s home, located
at 7744 South Carpenter Street, Chicago. The proceedings
got off to a bad start, however, because the complaint mis-
identified Sullivan-Moore’s common address as 7742 South
Carpenter instead of 7744 South Carpenter. As a result of
this error, Sullivan-Moore never received proper notice of
the proceedings before a judgment of foreclosure was en-
tered, her property was sold, and she was evicted. Although
sympathetic to the initial error, the district court believed
Fisher and Fisher had ample opportunity to rectify the
problem before Sullivan-Moore was evicted. The district
court thus imposed sanctions against Fisher and Fisher,
and it appeals, contending that the sanctions were improp-
erly imposed.
   The underlying action stems from a $140,000 loan from
U.S. Bank, taken out by Sullivan-Moore in 2001, when she
was 69 years old. Although the loan was ultimately used to
refinance Sullivan-Moore’s home at 7744 South Carpenter,
the loan application lists the property to be refinanced as
7742 (an adjacent property previously owned by her daugh-
ter). This may be why U.S. Bank listed the address as 7742
South Carpenter when it referred the mortgage to Fisher
and Fisher for foreclosure the following year after Sullivan-
Moore failed to make the mortgage payments. Relying on
the referral from U.S. Bank, Fisher and Fisher attorney
Cynthia Sutherin filed the foreclosure complaint in the
district court in August 2002. The complaint contained the
correct legal description of the property, but incorrectly
listed the common address as 7742 South Carpenter. How-
Nos. 04-2254 & 04-2968                                      3

ever, the consumer installment note and the mortgage
papers attached to the complaint itself correctly identified
the address as 7744 South Carpenter.
   In spite of these documents reflecting the correct address,
Fisher and Fisher continued to rely on the defective address
it had listed in the complaint. Not surprisingly, a process
server given that address was unable to effect personal ser-
vice. He reported back to Fisher and Fisher that the tenant
at 7742 South Carpenter did not know Sullivan-Moore and
paid rent to an individual named Donna Lillybirde. Just
over a week later, Fisher and Fisher moved for service by
publication. The district court granted the motion and the
notice was published in the Daily Law Bulletin, again list-
ing the common address as 7742 South Carpenter. Fisher
and Fisher went on to obtain a default order and judgment
of foreclosure, and scheduled a special commissioner’s sale
for April 30, 2003. U.S. Bank purchased the property at the
sale.
  Shortly after the commissioner’s sale Sutherin discovered
the address error. On May 16 she received calls from both
the tenant at 7742 Carpenter and an attorney for the
property’s owner, complaining about the eviction notice sent
there. These calls prompted Sutherin and another attorney
to examine the file, where they learned that the pleadings
contained the wrong commonly known address for the
property.
   Instead of exploring at that point whether Sullivan-Moore
had received adequate process, Fisher and Fisher pressed
forward, moving on May 21 for an order approving the sale
and an order for possession. Its only acknowledgment of the
error came by way of a motion to correct scrivener’s error
filed June 11, a motion Fisher and Fisher now acknowl-
edges was an inappropriate response to the mistake in the
complaint. The district court granted both motions, setting
the stage for Sullivan-Moore’s eviction.
4                                   Nos. 04-2254 & 04-2968

  Thus, although she had never received the requisite no-
tice of the proceedings, Sullivan-Moore was evicted on
August 1, 2003. She moved back in the next day, prompting
Fisher and Fisher to move for a renewed order of possession
so that they could enlist the Cook County Sheriff’s Depart-
ment to re-evict her.
  It was at the hearing on the motion for a renewed order
of possession that the district court learned that Sullivan-
Moore had never been served. Sullivan-Moore appeared at
the hearing with her daughter Delaura Sullivan. Michael
Fisher, an associate who had taken over the case to handle
the eviction, appeared for Fisher and Fisher. Sullivan-Moore
explained that she had not received notice of the foreclosure
before being evicted, and Delaura moved to vacate based on
lack of jurisdiction. Michael Fisher responded that although
he did not have the file for the foreclosure action, Sullivan-
Moore must have been served because she was evicted, and
anyway the case had been “over for almost four months.” In
an attempt to sort out whether Sullivan-Moore had been
served, the district court’s clerk retrieved the court’s
electronic docket. Meanwhile, Michael Fisher located
Sutherin, who had handled the foreclosure and happened to
be in court on another matter. Using the docket sheet the
district court then recounted the attempts at service to the
wrong address (7742). The court concluded that Sullivan-
Moore had never been properly served, a deficiency that
could not have been cured with the correction of the “scriv-
ener’s error.” Faced with this information, Sutherin moved
to vacate the order approving the sale, void the sale, and
vacate the judgment.
  Approximately one month later the district court sua
sponte issued an order requiring U.S. Bank and Fisher and
Fisher to show cause why they should not be sanctioned
under Federal Rule of Civil Procedure 11 and 28 U.S.C.
§ 1927. The court identified multiple potential Rule 11 vio-
lations, including failing to reasonably review the complaint
Nos. 04-2254 & 04-2968                                       5

before filing it, which would have revealed Sullivan-Moore’s
correct address, see Fed. R. Civ. P. 11(b)(3), failing to serve
Sullivan-Moore with the motion to correct scrivener’s error,
see Fed. R. Civ. P. 11(b)(1), and advocating—via the motion
for a renewed order of possession—the validity of papers
presented to the court after discovering that the papers
contained errors, see Fed. R. Civ. P. 11(b)(1).
  The district court later discharged U.S. Bank from the
rule to show cause, concluding that any sanctionable be-
havior was attributable to Fisher and Fisher. While the
show cause order was pending, Sullivan-Moore died, and
the district court appointed her daughter Delaura as a spe-
cial representative, see 735 ILCS 5/2-1008(b), and substi-
tuted her as the defendant. Finally, in response to Fisher
and Fisher’s stipulation that any sanction would run
against the firm as a whole, the district court released the
individual attorneys involved from liability.
  After receiving affidavits from Sutherin, Michael Fisher,
and several other Fisher and Fisher attorneys, the district
court issued an order sanctioning the firm. The court
concluded that the initial mistake as to Sullivan-Moore’s
address “was an honest one” for which Fisher and Fisher
should not be faulted. It believed, however, that the firm’s
actions after it learned of the mistake were sanctionable in
several respects. First, once it learned of the error, Fisher
and Fisher should have known that since the attempt at
personal service had been made at the wrong address, the
service by publication was deficient and thus the sale, judg-
ment, and other court orders needed to be vacated. The
court also pointed out that the motion to correct scrivener’s
error could not possibly cure the failure of process, and that
by filing such a motion instead of moving to vacate the
previous orders Fisher and Fisher caused the wrongful
eviction. The court also chastised the firm for seeking to
evict Sullivan-Moore yet a second time after at least two
attorneys who had worked on the case knew (or should have
6                                    Nos. 04-2254 & 04-2968

known) that Sullivan-Moore had never been served. Finally,
the court rebuked Michael Fisher for what it viewed as his
attempt to prevent Delaura from assisting her “elderly
mother” to communicate with the court at the hearing on
the motion for a renewed order of possession.
   By way of sanctions, the court ordered all Fisher and
Fisher attorneys admitted in the Northern District of
Illinois and any attorneys joining the firm within two years
to attend or view a sixteen-hour course in federal subject
matter jurisdiction and civil procedure. The court also
ordered Fisher and Fisher to reimburse the estate’s attor-
ney $302.47 in expenses. Fisher and Fisher filed a motion
for reconsideration, but the district court denied it.
  On appeal Fisher and Fisher contends that the district
court erred by entering sanctions against it. It also claims
that there is no support in the record for certain factual
findings made by the district court, and attacks the re-
quirement that current and future Fisher and Fisher
attorneys view or attend a sixteen-hour civil procedure
course as unreasonable and excessive.
  We review the district court’s decision to award sanctions
under both Rule 11 and § 1927 for an abuse of discretion.
See Cooter & Gell v. Hartmax Corp., 496 U.S. 384, 405
(1990); Corley v. Rosewood Care Ctr., Inc., 388 F.3d 990,
1013-14 (7th Cir. 2004). As relevant here, Rule 11 provides
that by presenting documents to the court, an attorney
certifies to the best of his or her knowledge that (1) they are
not being presented for any improper purpose, (2) the
claims and contentions are warranted by existing law, and
(3) the allegations and factual contentions have evidentiary
support. Here the district court found that Fisher and
Fisher violated Rule 11 by moving forward with Sullivan-
Moore’s eviction even after learning about the incorrect
address in its pleadings. The district court was within its
discretion to conclude that Fisher and Fisher’s course of ac-
Nos. 04-2254 & 04-2968                                      7

tion after learning of the defective address violated Rule 11.
As the court pointed out, the discovery of the mistaken
address should have prompted “a reasonably competent
second year law student . . . to move to vacate the sale and
judgment, and then to start over with proper service of
process.” Instead, Fisher and Fisher moved to correct a
scrivener’s error, representing to the court, in violation of
Rule 11(b)(2) and (3), that correcting the error would not “in
any way, prejudice any of the parties.”
  In its defense Fisher and Fisher makes much of the fact
that because Michael Fisher was handling the eviction as a
separate matter from the foreclosure, he did not know about
the address error when he moved for a renewed order of
possession. But the district court considered this argument
and rejected it, noting that “[t]he failure of the law firm to
have in place a mechanism whereby important information
about the foreclosure proceedings was in the possession of
the attorney handling the eviction is not mitigating, but
rather an aspect of the improper conduct in this case.” We
agree with the district court that Fisher and Fisher’s plea of
ignorance is unavailing. Rule 11 establishes an objective
test, and as we have repeatedly observed, an “empty head
but a pure heart is no defense.” Chambers v. Am. Trans Air,
Inc., 17 F.3d 998, 1006 (7th Cir. 1994) (citation and internal
quotations omitted). Rule 11 “requires counsel to read and
consider before litigating.” Thornton v. Wahl, 787 F.2d
1151, 1154 (7th Cir. 1986). Neither the firm’s caseload nor
its practice of shuffling cases from one attorney to another
within the firm excuses the type of negligent action that
caused Sullivan-Moore to be evicted.
  Likewise, we see no abuse of discretion in the district
court’s assessment that Fisher and Fisher’s reckless ap-
proach warranted an award of expenses under 28 U.S.C.
§ 1927. That section permits a district court to award ex-
penses incurred on account of attorney behavior that “mul-
tiplies the proceedings . . . unreasonably and vexatiously.”
8                                    Nos. 04-2254 & 04-2968

Fisher and Fisher acknowledges that its mistake regarding
the address came to the attention of at least two of its
attorneys on May 16, over two months before Sullivan-
Moore was evicted. In the interim, Fisher and Fisher sought
and received an order approving the sale and filed the
motion to correct scrivener’s error. And although Fisher and
Fisher had Sullivan-Moore’s correct address by then, it
failed to serve her with a copy of the motion, thus obviating
any opportunity for her to bring the situation to the court’s
attention before she was evicted two months later. The
district court was within its discretion to conclude that this
behavior unreasonably and vexatiously multiplied the
proceedings. See Finance Inv. Co. (Bermuda) v. Geberit AG,
165 F.3d 526, 533 (7th Cir. 1998); Fox Valley Constr.
Workers Fringe Benefit Funds v. Pride of Fox Masonry &
Expert Restorations, 140 F.3d 661, 666-67 (7th Cir. 1998).
  Fisher and Fisher also attacks certain factual findings
underpinning the court’s decision to award sanctions. Fisher
and Fisher points to three supposed “findings” by the dis-
trict court: that its failure to respond properly to the mis-
taken address was part of a “cover-up,” that its conduct was
“indicative of a larger pattern of violations of the rules of
civil procedure,” and that its conduct accelerated Sullivan-
Moore’s death. Although a sanctions award that rests on a
clearly erroneous assessment of the evidence would be an
abuse of discretion, Cooter, 496 U.S. at 405, there is no clear
error here.
  As to the court’s finding of a “cover-up,” neither its order
imposing sanctions nor the order denying Fisher and
Fisher’s Rule 59(e) motion mentions a “cover-up.” It is true
that the district court construed Michael Fisher’s conduct
at the hearing on the renewed order of possession as an
attempt to prevent Sullivan-Moore from explaining that she
had never been served. At the start of the hearing Delaura
attempted to assist Sullivan-Moore, and Michael Fisher ob-
jected on the ground that she was not an attorney and thus
Nos. 04-2254 & 04-2968                                       9

could not represent Sullivan-Moore. Fisher and Fisher now
argues that there was nothing improper about the objection.
Although the objection could be understood as one made for
a legitimate reason, we cannot say that the district court
clearly erred in concluding otherwise. The district court was
in the best position to assess Michael Fisher’s intentions,
and nothing Fisher and Fisher presents on appeal calls the
court’s judgment into question. See Maynard v. Nygren, 372
F.3d 890, 892 (7th Cir. 2004).
  The same can be said for the remaining factual findings
Fisher and Fisher challenges. Although Fisher and Fisher
disputes the district court’s observation that the firm’s
conduct was indicative of a “larger pattern of violations of
the rules of federal civil procedure by the attorneys of Fisher
and Fisher,” as “unsupported,” it offers nothing to undercut
the observation. Given the numbers Fisher and Fisher itself
advanced regarding its caseload, this case was not its first
before Judge Lindberg, and he was entitled to make an
assessment based on his firsthand observations in those
proceedings. See Vollmer v. Publishers Clearing House, 248
F.3d 698, 710 (7th Cir. 2001) (district court entitled to
consider party’s past conduct in imposing and fashioning
sanctions). Finally, the district court was entitled to enter-
tain the possibility that the stress of the eviction may have
exacerbated any health problems Sullivan-Moore, an elderly
woman, may have faced. Fisher and Fisher simply provides
no convincing alternatives to the factual findings it chal-
lenges on appeal. We are thus hard-pressed to conclude that
the findings are clearly erroneous.
  That leaves the firm’s contention that the sanctions them-
selves are unreasonable. The district court has wide lati-
tude to determine what sanctions should be imposed for a
Rule 11 violation, and may impose non-monetary sanctions
when appropriate to deter repetition of the offending
conduct. See Jimenez v. Madison Area Technical Coll., 321
F.3d 652, 657 (7th Cir. 2003). Although Fisher and Fisher
10                                  Nos. 04-2254 & 04-2968

now protests the requirement that all its attorneys view or
attend a civil procedure course, it waived any objection to
such a requirement in the district court. First, it stipulated
that any sanctions would run against the firm and not in-
dividual attorneys. Then in its Rule 59(e) motion Fisher and
Fisher attacked the requirement as casting too broad a net
by requiring all Fisher and Fisher attorneys to participate
in the civil procedure course. In response, the district court
asked the firm to provide a list of attorneys responsible for
the violations so that the sanctions could be more narrowly
tailored. Instead of complying, Fisher and Fisher withdrew
its request for the court to reconsider the scope of the sanc-
tion and explicitly agreed to both the length of the course
and the requirement that all current and future Fisher and
Fisher employees attend. Thus, it has waived the argument.
See Blickenstaff v. R.R. Donnelly & Sons Co. Short Term
Disability Plan, 378 F.3d 669, 681 (7th Cir. 2004); Bishop v.
Gainer, 272 F.3d 1009, 1015 (7th Cir. 2001). And even if the
issue had been preserved, we see nothing excessive or
overly burdensome in the court’s order that Fisher and
Fisher attorneys attend a sixteen-hour course in civil pro-
cedure.
                                                  AFFIRMED.

A true Copy:
       Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit

                   USCA-02-C-0072—4-27-05