FILED
United States Court of Appeals
Tenth Circuit
December 7, 2007
UNITED STATES COURT OF APPEALS Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
RICHARD EBERLY; PATRICIA
EBERLY,
Plaintiffs, No. 06-2337
(D. New Mexico)
v. (D.C. No. CIV-04-977-WJ/RLP)
CARL MANNING; LEE ZILLHART;
MARTHA ZILLHART; CHRISTINA A.
WIELAND,
Defendants - Appellees,
and
MAGELLA MANNING; ZUNI
MOUNTAIN, LTD., a New Mexico
Limited Partnership; LORENZO
SANCHEZ,
Defendants,
WILLIAM G. STRIPP,
Attorney - Appellant.
ORDER AND JUDGMENT *
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
Before MURPHY, BRORBY, and McCONNELL, Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
I. Introduction
This appeal challenges sanctions imposed on plaintiffs’ counsel pursuant to
28 U.S.C. § 1927. Attorney William Stripp appeals the district court’s award of
fees in the amount of $15,000 against him and in favor of the defendants. Taking
jurisdiction under 28 U.S.C. § 1291, this court AFFIRMS the district court’s
order granting in part defendants’ motion for § 1927 attorney’s fees.
II. Background
This diversity suit arises out of a contested easement that runs through the
plaintiffs’ land and is used by the defendants to access their land. Plaintiffs,
Richard and Patricia Eberly, claimed the defendants, Carl Manning, Magella
Manning, Christina Wieland, Martha Zillhart and Lee Zillhart, were trying to
drive them off their land and filed a complaint alleging trespass, conversion, and
prima facie tort. 1 The district court granted the defendants’ motion for summary
1
In the same complaint, plaintiffs filed a fraud claim against Lorenzo
(continued...)
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judgment, 2 finding the easement was valid and resolving all claims in favor of the
defendants.
In its opinion granting summary judgment to the defendants, the district
court noted it was difficult to determine the undisputed facts because the
plaintiffs changed their version of the facts in light of the defendants’ arguments.
The district court explained at different times in the litigation the plaintiffs argued
the easement did not exist; was no longer valid if it did exist; or it was not
accurately depicted if did exist and was valid. The district court found the
plaintiffs created “sham disputes” in arguing the road on which the defendants’
alleged trespass and conversion took place was different from either the original
dirt road or the road reserved as an easement, because the undisputed facts clearly
indicated otherwise. The district court noted in addition to shifting their factual
positions, the plaintiffs also shifted the legal positions on which they based the
litigation.
1
(...continued)
Sanchez and Zuni Mountain Ltd. relating to their actions in selling plaintiffs the
land. The claims against Sanchez and Zuni Mountain were dismissed by the
district court without prejudice at the request of the plaintiff. For the purposes of
this appeal, the substance of these claims is irrelevant.
2
The claims against Christina Wieland and Magella Manning were
dismissed with prejudice for insufficiency of process. The claims against Carl
Manning, Martha Zillhart and Lee Zillhart were resolved in defendants’ favor on
summary judgment.
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After the district court granted summary judgment, the defendants filed a
motion for sanctions under Federal Rule of Civil Procedure 11 and a motion for
attorney fees pursuant to 28 U.S.C. § 1927. 3 The district court denied the motion
for Rule 11 sanctions, but partially granted the defendants’ motion for § 1927
fees. In reaching its conclusion, the district court found plaintiffs’ counsel,
William Stripp, seemed to have ignored evidence which repudiated his clients’
claims early on in the litigation. The district court also found it was likely the
claims brought against Wieland, who had not entered the property since 2001, the
year the trespass was alleged to have begun, were asserted to harass and pressure
the other defendants. 4
The court found the only real dispute in the case was the validity of the
easement, which plaintiffs knew about from the time they purchased the property
in 1993. Had counsel conducted a proper investigation of the facts and the law,
this would have been obvious. In fact, the district court pointed to evidence
indicating Stripp was most likely on notice that the facts did not support his
clients’ claims. The district court also pointed to plaintiffs’ tendency to shift
legal positions in order to withstand defendants’ motions to dismiss. The court
noted the plaintiffs made “absurd” arguments in attempts to avoid dismissal. For
3
Carl Manning, Martha Zillhart, and Lee Zillhart were parties to the Rule
11 motion. Carl Manning, Christina Wieland, Martha Zillhart, and Lee Zillhart
were parties to the 28 U.S.C. § 1927 motion.
4
Martha Zillhart and Carl Manning are Wieland’s children.
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example, the plaintiffs argued the defendants were trespassing whether or not they
stayed within the easement area marked on the subdivision plat. Also, plaintiffs
vacillated on whether they would dispute the existence of the easement in this
lawsuit, a critical factual element of the case.
The district court awarded sanctions against Stripp in the amount of
$15,000. Stripp now appeals the order of the district court.
III. Discussion
A. Jurisdiction
The district court had jurisdiction in this diversity matter pursuant to 28
U.S.C. § 1332(a)(1) and this court has appellate jurisdiction pursuant to 28 U.S.C.
§ 1291. A sanction order against an attorney is not a final judgment when the
underlying controversy remains unresolved and, therefore, cannot trigger
appellate jurisdiction under § 1291. G.J.B. & Assocs., Inc. v. Singleton, 913 F.2d
824, 827 (10th Cir. 1990). We note that some claims were dismissed in the
district court without prejudice, which in some cases would render the judgment
not final and not appealable. Heimann v. Snead, 133 F.3d 767, 769-70 (10th Cir.
1998).
The judgment at issue here, however, is final for the purposes of § 1291.
The parties dismissed without prejudice, Lorenzo Sanchez and Zuni Mountain
Ltd., are not parties to this appeal and did not bring a motion for sanctions. There
are no unresolved claims between the parties to this appeal. Cf. id (holding where
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counterclaims were dismissed without prejudice, the judgment of the district court
was not final). In addition, plaintiffs’ claims against Sanchez and Zuni Mountain,
while arising out of the same plot of land, are not related to the claims against the
parties to this appeal. There is also no evidence the parties conspired to create
appellate jurisdiction. See id. at 769 (“Parties may not confer appellate
jurisdiction upon us by obtaining a voluntary dismissal without prejudice of some
claims so that others may be appealed.”). As a result, this case is sufficiently
distinguishable from Heimann. The judgment of the district court is final and this
court has jurisdiction over this appeal pursuant to 28 U.S.C. § 1291.
B. Section 1927 Sanctions
Twenty-eight U.S.C. § 1927 provides, “[a]ny attorney . . . 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.” Sanctions are
appropriate when an attorney acts recklessly or with indifference to the law; is
cavalier or bent on misleading the court; intentionally acts without a plausible
basis; or when the entire course of the proceedings is unwarranted. Steinert v.
Winn Group, Inc., 440 F.3d 1214, 1221 (10th Cir. 2006). We consider an
attorney’s actions under the standard of objective bad faith. Braley v. Campbell,
832 F.2d 1504, 1512 (10th Cir. 1987) (en banc). A district courts’s award of §
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1927 fees is reviewed for abuse of discretion, but any statutory interpretation or
other legal analysis is reviewed de novo. Steinert, 440 F.3d at 1221.
1. Sanctions Based on Filing the Complaint
Stripp contends that the district court improperly based its imposition of
sanctions on the initial filing of the complaint in federal court. Section 1927
“necessarily excludes the complaint that gives birth to the proceedings, as it is not
possible to multiply proceedings until after those proceedings have begun.”
Steinert, 440 F.3d at 1225. We find no basis for Stripp’s contention. The district
court explicitly rejected the defendants’ argument that sanctions were warranted
based on the plaintiffs’ assertion of federal jurisdiction. Instead, the district court
explained its decision was based on counsel’s behavior during the proceedings,
which is a proper basis for § 1927 sanctions.
2. Basis for § 1927 Sanctions
Stripp next argues there was no evidence of unreasonable or vexatious
behavior warranting the imposition of sanctions and the district court failed to
adequately explain what behavior constituted the basis for its award of sanctions.
We cannot agree that the district court abused its discretion in finding adequate
justification for the imposition of sanctions.
In its opinion, the district court discussed specific conduct justifying
sanctions and explained how those actions unreasonably multiplied and increased
the costs of the proceedings. As explained in the Memorandum Opinion and
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Order on Motions for Sanctions and Attorney’s Fees, the court gave examples of
the shifting positions adopted by the plaintiffs in order to avoid summary
judgment, which increased costs to the defendants who had to respond to the
changing arguments. For example, when the defendants argued the district court
lacked subject matter jurisdiction because plaintiffs failed to exhaust their
administrative remedies on the subject of the easement’s validity, the plaintiffs
changed their position and argued the defendants had trespassed outside the
easement boundaries. In response to a later motion for summary judgment, the
plaintiffs sought dismissal without prejudice because they had determined the cost
of proceeding with the litigation would outstrip the value of the land, a fact that
should have been readily apparent earlier in the proceedings.
The district court also provided examples of “sham disputes” manufactured
by the plaintiffs, which increased costs to the defendants who had to respond to
the disputes. For example, the plaintiffs placed significant emphasis on the
defendants’ widening of a pre-existing road to thirty feet, when it was undisputed
that the road easement was forty feet. Further, plaintiffs alleged defendants
trespassed regardless of whether they were within the easement and vacillated on
whether they would dispute the existence of the easement, the only real issue in
the lawsuit. The district court found these tactics unnecessarily prolonged the life
of this case.
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The district court’s decision explains that all claims in this dispute were
predicated on whether the easement was valid. The aforementioned tactics were
designed to obfuscate this core issue. This occurred even though, according to
the district court’s finding, the plainitffs’ knew about the existence of a valid
easement at the time they purchased the land. When an attorney pursues meritless
claims, the course of the proceedings is unwarranted and sanctions are justified.
Dominion Video Satellite, Inc. v. Echostar Satellite L.L.C., 430 F.3d 1269, 1278-
79 (10th Cir. 2005) This court concludes the imposition of sanctions under §
1927 was not an abuse of discretion.
3. Specificity of Findings Regarding the Amount of Sanctions
Finally, Stripp argues the district court abused its discretion in awarding
the amount of $15,000 because it failed to provide adequate specificity in its
findings. In order to impose sanctions, a district court must make findings
sufficient to “(1) identify the excess costs providing a basis for the sanctions; (2)
identify the conduct leading to the sanctions in order to provide notice and to
allow a meaningful response from the sanctioned attorney; and (3) identify for the
reviewing court the reason for the sanction.” Sally Beauty Co., Inc. v. Beautyco,
Inc., 372 F.3d 1186, 1190 (10th Cir. 2004).
The defendants requested a total of $32,457.50 in attorneys fees for 235.2
hours of work that counsel expended in this matter. The district court determined
that although the fee charged by the defendant’s attorney was reasonable, a lower
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number of hours expended seemed more reasonable given the complexity of the
matter and awarded $15,000. Although the district court did not itemize its
deductions, “[a] general reduction of hours claimed in order to achieve what the
court determines to be a reasonable number is not an erroneous method.” Mares
v. Credit Bureau of Raton, 801 F.2d 1197, 1203 (10th Cir. 1986). The district
court, therefore, did not abuse its discretion in choosing to set fees at $15,000.
Furthermore, the district court adequately explained the costs associated
with the sanctionable conduct. As explained, supra, the district court discussed
the specific conduct justifying sanctions, and the excess costs associated with the
conduct. Specifically, it noted counsel’s tactics unnecessarily prolonged the case
and therefore increased associated costs. “[W]hen the context for the assignment
of costs is clear, and the justification for the imposition of costs is included in the
record . . . more specific findings are not required.” Sally Beauty Co., 372 F.3d at
1190. The district court met this standard and, as a result, we cannot say that the
district court abused its discretion.
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IV. Conclusion
The judgment of the United States District Court of New Mexico is
AFFIRMED.
ENTERED FOR THE COURT
Michael R. Murphy
Circuit Judge
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