UNPUBLISHED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Affirmed in part, reversed in part, and remanded by unpublished per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Unpublished opinions are not binding precedent in this circuit.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
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