Court Opinion

ID: 4578004
Source: CourtListenerOpinion
Date Created: 2020-10-16 21:01:21.477946+00
Date Added: 2024-06-11T13:38:36.082451
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                             File Name: 20a0587n.06

                                                  No. 20-1196

                               UNITED STATES COURT OF APPEALS
                                    FOR THE SIXTH CIRCUIT

    JOHN P. HANKINS,                                               )                              FILED
                                                                   )                        Oct 16, 2020
          Plaintiff-Appellant,
                                                                   )                   DEBORAH S. HUNT, Clerk
                                                                   )
    RAYMOND GUZALL III, et al.,
                                                                   )
          Third-Party Appellants,                                  )        ON APPEAL FROM THE
                                                                   )        UNITED STATES DISTRICT
          v.                                                       )        COURT FOR THE EASTERN
                                                                   )        DISTRICT OF MICHIGAN
    CITY OF INKSTER, MICHIGAN, et al.,                             )
          Defendants,                                              )        OPINION
                                                                   )
    BARRY A. SEIFMAN, et al.,                                      )
                                                                   )
          Third-Party Plaintiffs-Appellees.                        )

         BEFORE: McKEAGUE, GRIFFIN, and BUSH, Circuit Judges.

         JOHN K. BUSH, Circuit Judge. Raymond Guzall appeals the district court’s Amended

Order Granting in Part and Denying in Part Guzall’s Motion [184] and Authorizing the Dispersal

of Funds in the Clerk of the Court’s Interest-Bearing Account. This order amended the district

court’s prior order that adopted the magistrate judge’s Report and Recommendation, overruled

Guzall’s objection, and granted Seifman’s Motion for Disbursement of Funds Held in an Interest

Bearing Account. Most of the claims raised by Mr. Guzall and Raymond Guzall III, P.C.1 have

already been decided by a prior panel of this court. Those that have not are largely frivolous. For

the following reasons, we AFFIRM the judgment of the district court.

1
 For the sake of clarity, we refer to the Third-Party Appellants as “Guzall” and the Third-Party Plaintiffs-Appellees
as “Seifman.”
Case No. 20-1196, Hankins v. City of Inkster

                                               I.

       Guzall’s claims arise from a longstanding dispute with his former law partner, Barry

Seifman, over a contingency fee earned from the representation of John Hankins in an employment

discrimination action against the City of Inkster (“the City”) and the City’s Police Chief. Hankins

v. City of Inkster (Hankins I), 768 F. App’x 304, 305 (6th Cir. 2019). Guzall contends that, while

representing Hankins, Guzall was forced to leave his partnership with Seifman in February 2012

upon discovery of Seifman’s alleged involvement in illegal and unethical activities. Id. Seifman

denies Guzall’s allegations of wrongdoing. Id. When Guzall collected a contingency fee from

Hankins’s settlement with the City, Seifman intervened against Hankins, the defendants, and non-

party Guzall. Id. The district court held the case in abeyance while a contemporaneous Michigan

state court proceeding between Seifman and Guzall determined whether Guzall improperly took

client files when he left the firm and whether Seifman engaged in criminal and unethical conduct.
Id. The Michigan state court held that Guzall “had improperly taken the client files but that no

other claims by either party remained because Guzall and Seifman had accepted their ‘case

evaluations’ (alternative-dispute-resolution decisions).” Id. After the Michigan Court of Appeals

affirmed, and the Michigan Supreme Court denied leave to appeal further, the district court

reopened the case. Id.

       The magistrate judge conducted a hearing to determine six issues: “(1) the Firm’s

shareholder agreement between Seifman and Guzall; (2) when Guzall quit the Firm and when he

told Seifman; (3) when and how Hankins told Seifman he was firing the Firm; (4) when and how

Hankins retained Guzall; (5) when and how Guzall took the Hankins file from the Firm; and (6) the

hours Guzall and Seifman each spent on the case, their hourly rates, and whether Seifman was

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Case No. 20-1196, Hankins v. City of Inkster

entitled to compensation in quantum meruit.” Id. at 305–06. The magistrate judge prohibited any

discussion of Guzall’s allegations of Seifman’s misconduct. Id. at 306.

          Following the hearing, the magistrate judge issued a Report and Recommendation on

December 8, 2017. Id. at 306. The district court, in turn, “thoroughly address[ed] and overrul[ed]

Guzall’s objections” to the Report and Recommendation before adopting it as its final order. Id.

at 306.

          Guzall appealed the district court’s order, and this court affirmed the order on March 22,

2019. Id. at 305. Guzall then filed a petition for a writ of certiorari with the U.S. Supreme Court,

which was denied. On November 14, 2019, the magistrate judge issued another Report and

Recommendation (the “November 14, 2019 R&R”), recommending that the district court grant

Seifman’s Motion for Order for the Withdrawal of Funds Held in an Interest-Bearing Account and

disburse the funds pursuant to the district court’s previous order. Hankins v. City of Inkster, No.

09-13395, 2019 WL 7882571, at *4 (E.D. Mich. Nov. 14, 2019). The district court again addressed

and overruled Guzall’s objections before adopting the November 14, 2019 R&R as its final order

on January 10, 2020. Hankins v. City of Inkster, No. 09-13395, 2020 WL 113780, at *3–4 (E.D.

Mich. Jan. 10, 2020).

                                                 II.

          The bulk of Guzall’s claims have already been decided by the prior Sixth Circuit panel.

Thus, the law of the case doctrine largely controls. As to his other claims, the district court did

not abuse its discretion in refusing to sanction Seifman, and we reject Guzall’s claims that the

magistrate judge acted with bias. Nevertheless, we will not impose sanctions on Guzall.

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Case No. 20-1196, Hankins v. City of Inkster

       A. Law of the Case Doctrine

       Guzall’s claims regarding the November 14, 2019 R&R, the interpretation of the

Shareholder Agreement, and the determination of Guzall’s hourly rate are controlled by the law of

the case doctrine. This principle dictates that “when a court decides upon a rule of law, that

decision should continue to govern the same issues in subsequent stages in the same case.” Scott

v. Churchill, 377 F.3d 565, 569 (6th Cir. 2004) (quoting Arizona v. California, 460 U.S. 605, 618

(1983)); accord Miller v. Maddox, 866 F.3d 386, 389 (6th Cir. 2017). The law of the case doctrine

prevents the “reconsideration of identical issues” decided “either explicitly or by necessary

inference from the disposition” at a prior stage of litigation. Hanover Ins. Co. v. Am. Eng’g Co.,

105 F.3d 306, 312 (6th Cir. 1997) (first quoting Petition of U.S. Steel Corp., 479 F.2d 489, 493

(6th Cir. 1973); then quoting Coal Res., Inc. v. Gulf & W. Indus., 865 F.2d 761, 766 (6th Cir.

1989), as amended on denial of reh’g, 877 F.2d 5 (6th Cir.)). An appellate court may reconsider

a prior ruling “(1) where substantially different evidence is raised on subsequent trial; (2) where a

subsequent contrary view of the law is decided by the controlling authority; or (3) where a decision

is clearly erroneous and would work a manifest injustice.” Id.

       The goal of this doctrine is to “enforce a district court’s adherence to an appellate court’s

judgment.” Miller, 866 F.3d at 390. We review a lower court’s application of the law of the case

doctrine for abuse of discretion. Rouse v. DaimlerChrysler Corp., 300 F.3d 711, 715 (6th Cir.

2002) (citing Pac. Emps. Ins. Co. v. Sav-a-Lot of Winchester, 291 F.3d 392, 398 (6th Cir. 2002)).

“A district court abuses its discretion when it relies on clearly erroneous findings of fact, when it

improperly applies the law, or uses an erroneous legal standard.” Hayes v. Comm’r of Soc. Sec.,

895 F.3d 449, 452 (6th Cir. 2018) (quoting Glenn v. Comm’r of Soc. Sec., 763 F.3d 494, 497 (6th

Cir. 2014)).

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Case No. 20-1196, Hankins v. City of Inkster

           1. The November 14, 2019 R&R

       Guzall argues that the November 14, 2019 R&R shows that the district court lacked

subject-matter jurisdiction over the interpretation of the Shareholder Agreement, as well as

personal jurisdiction over Guzall or Seifman, because the magistrate judge should only have

decided Seifman’s claimed lien. Guzall’s purported basis for this assertion is that a minute entry

from February 17, 2012 stated that the “lien issue [was] to be decided later,” even though the

magistrate judge issued the November 14, 2019 R&R upon the district court’s referral of the

Motion for Order for the Withdrawal of Funds Held in an Interest-Bearing Account—over seven

years after the minute entry. Moreover, an appellate court need not explicitly state that a trial court

had jurisdiction over a particular claim or over the relevant parties when it decides a case. Rather,

“[e]very court in rendering a judgment tacitly, if not expressly, determines its jurisdiction over the

parties and the subject matter.” Stoll v. Gottlieb, 305 U.S. 165, 171–72 (1938). A party cannot

claim that the district court should reconsider an issue previously decided by the appellate court

simply because the appellate court “did not explicitly assert jurisdiction on the record.” Keith v.

Bobby, 618 F.3d 594, 600 (6th Cir. 2010) (holding that the law of the case doctrine prevented a

district court from reconsidering whether a habeas corpus petition was “second or successive”

because the appellate court, in previously deciding so, had implicitly asserted its jurisdiction).

       Guzall likewise claims that the magistrate judge erred by determining the division of fees

between Guzall and Seifman in the November 14, 2019 R&R, rather than deciding plaintiff John

Hankins’s April 26, 2012 motion to determine Seifman’s claimed lien. The November 14, 2019

R&R recommended that the settlement funds be distributed according to the May 16, 2018 district

court order and judgment. The Sixth Circuit had already affirmed that order and judgment.

Hankins I, 768 F. App’x at 307–08. Beyond the frivolity of suggesting that the magistrate judge

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Case No. 20-1196, Hankins v. City of Inkster

erred by failing to address a motion from seven years earlier, Guzall’s claim fails because the

magistrate judge did not abuse its discretion by adhering to the decision of both the district court

and the Sixth Circuit. See Miller, 866 F.3d at 389–90.

           2. Interpretation of the Shareholder Agreement

       Guzall contests the Sixth Circuit’s application of Michigan law when it interpreted the

Shareholder Agreement. More specifically, Guzall seeks to relitigate the interpretation of the

Shareholder Agreement on appeal after the district court complied with the directions of the March

22, 2019 Sixth Circuit decision in Hankins I.

       None of the exceptions to the law of the case doctrine apply. See Hanover Ins., 105 F.3d

at 312. We will not disturb this Court’s prior interpretation of the Shareholder Agreement. The

district court did not abuse its discretion in abiding by the Sixth Circuit’s interpretation.

           3. Determination of Guzall’s Hourly Rate

       Finally, Guzall argues that the magistrate judge improperly determined his hourly rate.

Guzall posits that he should not have been paid an hourly rate based on quantum meruit, but, even

if determining his hourly rate had been appropriate, it should have been calculated based on his

2018 hourly rate.

       The district court addressed this argument when it adopted the December 8, 2017 Report

and Recommendation, explaining that the magistrate judge had informed Guzall and Seifman that

testimony at the evidentiary hearing would be limited to, among other issues, the time Guzall and

Seifman spent on the case and their hourly rates charged. We affirmed this decision: “[T]he district

court did not abuse its discretion in conducting the evidentiary hearing or determining his hourly

rate and costs.” Hankins I, 768 F. App’x at 307. The November 14, 2019 R&R explained that the

law of the case doctrine precludes Guzall from relitigating his hourly rate. We agree.

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Case No. 20-1196, Hankins v. City of Inkster

       B. The District Court’s Refusal to Sanction Seifman

       Guzall argues that the district court erred in failing to sanction Seifman for allegedly

violating the district court’s March 8, 2016 and June 15, 2018 orders. Guzall further contends that

Seifman engaged in various forms of misconduct throughout litigation, which he claims warranted

a sanction of default judgment.

       We review a district court’s interpretation and enforcement of its own orders under an

abuse-of-discretion standard. Satyam Comput. Servs., Ltd. v. Venture Global Eng’g, LLC, 323 F.

App’x 421, 430 (6th Cir. 2009). We recognize that the district court is “in the best position to

interpret its own order.” Id. (citation omitted). We likewise review a district court’s decision

regarding sanctions under 28 U.S.C. § 1927 and for bad faith under an abuse-of-discretion

standard. Chambers v. NASCO, Inc., 501 U.S. 32, 45–46, 55 (1991) (describing a federal court’s

inherent power to sanction a party upon a finding of bad faith); First Bank of Marietta v. Hartford

Underwriters Ins. Co., 307 F.3d 501, 510, 525 (6th Cir. 2002). To impose sanctions, a district

court must make a specific finding of bad faith. Eaton Aerospace, L.L.C. v. SL Montevideo Tech.,

Inc., 129 F. App’x 146, 154 (6th Cir. 2005). Furthermore, a district court need not explain its

reasoning for abstaining from imposing sanctions. Id. at 153 (citing Orlett v. Cincinnati

Microwave, Inc., 954 F.2d 414, 417 (6th Cir. 1992)).

       On March 8, 2016, the magistrate judge issued an order providing that “no further

pleadings . . . be filed in this case without first obtaining leave of the court.” On June 15, 2018,

the district court ordered a continuance of the escrow of attorney’s fees until “final determination

of the appeal in this case,” pursuant to the parties’ June 14, 2018 Stipulation for Entry of Order to

Continue Escrow of Funds. Seifman filed two motions following these orders: a Motion for Order

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Case No. 20-1196, Hankins v. City of Inkster

for the Withdrawal of Funds Held in an Interest-Bearing Account on May 31, 2018 and a Motion

for the Withdrawal of Funds Held in an Interest-Bearing Account on June 11, 2019.

       Guzall argues that the district court abused its discretion by failing to sanction Seifman

with an entry of default judgment. In the November 14, 2019 R&R, the magistrate judge rejected

this argument, explaining that the March 8, 2016 order “was clearly and solely directed at

pleadings and motions prior to [the December 8, 2017 R&R] on the underlying motion to

determine the division of attorney fees.” The magistrate judge indicated that Guzall must have

understood this meaning of the March 8, 2016 order, as Guzall himself filed objections to the

original Report and Recommendation without seeking leave of the court. Indeed, the district

court’s order explained that “the only reasonable interpretation of the Magistrate Judge’s Order

was that further filings were not permitted while he decided the attorneys fee issue . . . There would

be no reason for a Magistrate Judge, who had been referred a few specific motions, to take on the

role of screening all future motions to be filed on a case.” Moreover, Guzall’s claim that Seifman

violated the June 15, 2018 order is baseless, as Seifman filed the June 11, 2019 motion after the

denial of Guzall’s petition for rehearing en banc, and Guzall did not move to stay the Sixth

Circuit’s mandate pending a petition for writ of certiorari in the U.S. Supreme Court pursuant to

Federal Rule of Appellate Procedure 41(d)(1). Thus, the district court did not abuse its discretion

in refusing to sanction Seifman for filing the May 31, 2018 and June 11, 2019 motions.

       Finally, Guzall accuses Seifman of numerous instances of fraud and argues that the district

court again erred in refusing to impose a sanction of default judgment against Seifman. Even if

Guzall’s claims had any merit, the district court made no finding of bad faith on Seifman’s part,

and it is not required to explain why it chose not to impose sanctions. See Eaton Aerospace, 129

F. App’x. at 153–54.

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Case No. 20-1196, Hankins v. City of Inkster

       C. Guzall’s Due Process Claims and Allegations of Impropriety

       Guzall ascribes the district court’s decisions to impropriety and bias, culminating in a

violation of due process. Notably, Guzall never moved to disqualify the magistrate judge or the

district court judge. He merely argued that the district court judge should have rejected the

November 14, 2019 R&R because the magistrate judge “did not avoid the appearance of

impropriety, [and] abused his discretion.” R. 179 at PageID 4114.

       By statute, a judge must recuse himself “where a reasonable person with knowledge of all

the facts would conclude that the judge’s impartiality might reasonably be questioned.’” Burley

v. Gagacki, 834 F.3d 606, 616 (6th Cir. 2016) (citation omitted); see 28 U.S.C. § 455(a). But a

judge’s failure to recuse rarely amounts to a denial of due process. Caperton v. A.T. Massey Coal

Co., Inc., 556 U.S. 868, 876 (2009) (“As the Court has recognized . . . ‘most matters relating to

judicial disqualification [do] not rise to a constitutional level.’”) (quoting FTC v. Cement Inst., 333
U.S. 683, 702 (1948)). “Due process will require recusal when a judge has ‘a direct, personal,

substantial, pecuniary interest in a case,’ and when, as an objective matter, ‘experience teaches

that the probability of actual bias on the part of the judge or decision maker is too high to be

constitutionally tolerable.’” United States v. Prince, 618 F.3d 551, 561 (6th Cir. 2010) (quoting

Caperton, 556 U.S. at 876–77).

       Guzall contends that the magistrate judge’s adherence to the Sixth Circuit’s opinion

constitutes a violation of due process. Guzall further argues that the magistrate judge’s statement

that he had not read Guzall’s petition for writ of certiorari before the U.S. Supreme Court and his

expression of doubt that the petition would be successful evince the magistrate judge’s bias. Guzall

also considers the magistrate judge’s response to his objection to Seifman’s alleged violation of

the March 8, 2016 order to be improper: the magistrate judge noted that Guzall himself had filed

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Case No. 20-1196, Hankins v. City of Inkster

objections to the December 8, 2017 Report and Recommendation, although Guzall claims that the

general invitation to submit objections constituted “leave of the court,” in addition to rescinding

the March 8, 2016 order for the sake of clarity. These actions do not amount to a display of bias

or impropriety or to a denial of due process. See Burley, 834 F.3d at 616; Prince, 618 F.3d at 561.

       Lastly, Guzall requests that a forensic exam of the audio recording and video recording “if

such exists” from the October 22, 2019 hearing be conducted to determine if they have been

altered. He claims that an expression of doubt over the success of his petition for writ of certiorari

before the Supreme Court was omitted from the transcript. This claim is frivolous. Even a casual

reading of the transcript shows that it includes the magistrate judge’s understandable (and later

proven accurate) belief that the Supreme Court would deny Guzall’s petition. R. 194, Mot. for

Disbursement of Funds Hr’g Tr., at PageID 33. And even if an omission existed, it would not be

enough to lead a reasonable person to question the magistrate judge’s impartiality, and it certainly

would not amount to a denial of due process. See Burley, 834 F.3d at 616; Prince, 618 F.3d at

561.

       Guzall offers no evidence of bias on the magistrate judge’s, the district court judge’s, or

the Sixth Circuit’s part. We therefore AFFIRM the district court’s finding that Guzall suffered

from no bias or impropriety.

       D. Appellate Sanctions

       Finally, Seifman asks us to impose sanctions on Guzall for filing this appeal. We have

discretion to impose sanctions if we determine that an appeal is frivolous. See Fed. R. App. P. 38.

But Rule 38 only allows sanctions “after a separately filed motion or notice from the court and

reasonable opportunity to respond.” Id. Seifman did not file a separate motion for sanctions, so

we decline to award sanctions against Guzall. Nevertheless, we rebuke Guzall for his persistent

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Case No. 20-1196, Hankins v. City of Inkster

and unprofessional attacks on Seifman, the magistrate judge, the district court judge, the district

court judge’s legal assistant, the Financial Clerk at the district court, and, finally, the Sixth Circuit

panel that decided the prior appeal.

        Guzall has been filing misleading and abusive briefing relevant to this case in both this

Circuit and in the Michigan courts for years. See, e.g., Guzall III v. Warren, No. 18-000343-CB,

2018 WL 9991250, at *11 (Mich. Cir. Ct. June 15, 2018) (imposing sanctions on Guzall where

Guzall “attempt[ed] to re-litigate an issue that the Court of Appeals ha[d] affirmed” and where

“[i]t appear[ed] that the purpose of the instant lawsuit [was] to harass Seifman and [was] devoid

of arguable legal merit.”). Before this panel, he lodged outlandish accusations of fraud and bias

with inflammatory language throughout his briefing. See, e.g., Appellant Br. at 32 (“Because one

could conclude Magistrate Whalen’s Report made every attempt to avoid the law, to the point of

making up the law and facts when the law and facts could not be avoided to favor Seifman’s

position . . . .”); id. at 36 (“The trial court’s intimation [through a ‘documented false

statement’] . . . further illustrates the improper bias for Seifman and against Hankins and Guzall.”);
id. at 38 (“Attorney Warren’s . . . email also illustrates the scheme and fraud as Seifman attempted

to dupe and defraud the Clerk and Court again . . . .”); id. at 44 (“Seifman’s . . . order was thus a

purposefully and knowingly attempt to defraud the Financial Clerk and the Court in attempt to

pilfer more funds.”); id. at 45 (“ . . . places Seifman’s fraud well over the top.”); id. at 46 (“So for

the Magistrate to claim that despite his clear order Guzall was supposed to have magically

understood . . . may also be concluded to be a sham argument, an improper attempt to cover and

deprive Guzall of his rights . . . .”).

        A brief is not the appropriate place for Guzall to air his grievances against his former law

partner. Regardless of Guzall’s personal animus, there is no good reason to use the limited space

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Case No. 20-1196, Hankins v. City of Inkster

in his brief to hurl insults. As we have noted before, “[c]areful research and cogent reasoning, not

aspersions, are the proper tools of our trade.” Bearden v. Ballad Health, 967 F.3d 513, 519 (6th

Cir. 2020) (citation omitted). Not only is derogatory language unpersuasive, but it also violates

the expectation that members of the bar will accord due respect to those involved in the judicial

process. See Bennett v. State Farm Mut. Auto. Ins. Co., 731 F.3d 584, 585 (6th Cir. 2013); 6th Cir.

R. 46. Moreover, an attorney should not waste this Court’s resources as part of a personal vendetta

in the wake of a soured business relationship. See Fed. R. Civ. P. 11(b)(1); Fed. R. App. P. 38.

       That is not to say that a lawyer should not be a forceful and passionate advocate for a client.

“But just as one cannot ‘equate contempt with courage or insults with independence,’ we cannot

dismiss the disparaging statements in this case as mere stylistic flourishes or vigorous advocacy.”

Bearden, 967 F.3d at 519 (quoting Sacher v. United States, 314 U.S. 1, 14 (1952)). If Guzall

appears before this Court again, we expect him to conform his conduct accordingly.

                                                III.

       For the foregoing reasons, we AFFIRM the district court’s judgment.

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