Schaffhausen v. Bank of America

Full title: THOMAS SCHAFFHAUSEN, Plaintiff, v. BANK OF AMERICA; EXPERIAN INFORMATION…

Court: United States District Court, D. Minnesota

Date published: Feb 2, 2004

Civil No. 03-3492 (JRT/FLN) (D. Minn. Feb. 2, 2004)

Opinion

Civil No. 03-3492 (JRT/FLN)

February 2, 2004

Thomas J. Lyons, Jr., CONSUMER JUSTICE CENTER, Little Canada, MN, for plaintiff

Emily L. Fitzgerald, DORSEY WHITNEY, Minneapolis, MN, for defendant Bank of America

ORDER

JOHN TUNHEIM, District Judge

Counsel for plaintiff appeals United States Magistrate Judge Franklin L. Noel's Order dated August 27, 2003, in which he was ordered to reimburse defendant, Bank of America, for the reasonable costs and fees it incurred in making its Motion for an Enlargement of Time to Answer, Move, or Respond. For the reasons discussed below, the August 27, 2003, Order is affirmed.

BACKGROUND

Plaintiff served the Complaint in this matter on June 26, 2003. Local counsel for Bank of America, an out-of-state corporation, received the papers on July 9, 2003. Bank of America's local counsel attempted to secure an agreement to extend the time to answer, as contemplated by Fed.R.Civ.P. 6(b). Counsel for plaintiff would not agree to the extension unless Bank of America agreed to stop reporting to the various credit bureaus credit information — essentially, the relief plaintiff seeks in the underlying dispute. Bank of America's local counsel was then forced to file a Motion for an Enlargement of Time to Answer, Move, or Respond. Plaintiff did not respond to defendant's motion. The Magistrate Judge's staff was then required to contact counsel for plaintiff to inquire if the Motion for an Enlargement of Time was opposed. Plaintiff's counsel represented that plaintiff did not plan to file any opposition papers, but nonetheless did not want the Court to grant the motion.

The Magistrate Judge then scheduled a hearing on the Motion for an Enlargement of Time. Shortly before the hearing, counsel for plaintiff agreed to the extension, and the parties notified the Court that the hearing would not be necessary. The Magistrate Judge sua sponte ordered plaintiff to show cause as to why he should not have to pay Bank of America's costs and fees in bringing the motion. Counsel for plaintiff responded to the show cause order. Without a hearing, the Magistrate Judge rejected counsel's arguments, and ordered plaintiff to pay Bank of America's costs and fees. The Magistrate Judge concluded that if plaintiff had a legitimate reason to oppose the motion, plaintiff's counsel should have filed a timely response. No such response was filed, therefore the Magistrate Judge determined that plaintiff had no reason to oppose the motion. Plaintiff then filed this appeal of the imposition of sanctions.¹ The Magistrate Judge also ordered counsel for Bank of America to file an affidavit of costs and fees. Defense counsel filed an affidavit of costs and fees, totaling $985.70.

1 Other than filing an affidavit outlining its costs and attorney fees associated with bringing its motion, Bank of America has not taken a position regarding the imposition of sanctions in this matter.

ANALYSIS

Section 1927 of Title 28 of the United States Code provides for the imposition of costs and attorney's fees against an attorney who "so multiplies the proceedings in any case unreasonably and vexatiously." 28 U.S.C. § 1927; see also VanDanacker v. Main Motor Sales Co., 109 F. Supp.2d 1045, 1046 (D. Minn. 2000). Courts are also authorized to impose sanctions, including awards of attorney fees, pursuant to the court's inherent authority to punish "conduct which abuses the judicial process."² VanDanacker, 109 F. Supp.2d at 1046 (citing Chambers v. NASCO, Inc., 501 U.S. 32, 44-45 (1991)). Where the court sanctions attorney conduct under its inherent power, the offensive conduct must "constitute[ ] or [be] tantamount to bad faith." Roadway Express, Inc. v. Piper, 447 U.S. 752, 767 (1980). Whether an explicit finding of "bad faith" is required for the imposition of sanctions under § 1927, however, is not clear. See NAACP v. Atkins, 908 F.2d 336, 340 (8th Cir. 1990) (noting that "the language of § 1927 appears to require both a finding of objectively unreasonable behavior and a finding of bad faith."); O'Connell v. Champion Int'l Corp., 812 F.2d 393, 395 n. 2 (8th Cir. 1987) ("We do not hold that § 1927 contains only an objective standard, as opposed to both an objective and subjective standard. The words of the statute require unreasonable and vexatious conduct. 28 U.S.C. § 1927. Whether this requires a finding of bad faith in addition to unreasonable conduct is a question that is not before us."), see also Van Danacker, 109 F. Supp.2d at 1046. However, the Eighth Circuit has announced that "[t]he standard under § 1927 and Rule 11 is whether the attorney's conduct 'viewed objectively, manifests either intentional or reckless disregard of the attorney's duties to the court.'" Perkins v. Spivey, 911 F.2d 22, 36 (8th Cir. 1990) (citations omitted).

2 Federal Rule of Civil Procedure 11 also authorizes sanctions, but that Rule is not at issue in this matter.

The Magistrate Judge in this case determined that counsel's conduct was unreasonable. This Court agrees. Plaintiff had no reasonable opposition to the request for an extension of time. If plaintiff had a legitimate opposition, plaintiff should have filed a timely response to the motion. The failure to do so created unnecessary work for the court's staff, and unnecessary expense for opposing counsel. See KAPCO Mfg. v. CO Enter., 886 F.2d 1485, 1491 (7th Cir. 1989) (the purpose of section 1927 is "to ensure that those who create unnecessary costs also bear them"). Although the Magistrate Judge did not use the phrase "bad faith," it is clear from the Magistrate Judge's Order that the Magistrate Judge found counsel's behavior unreasonable and vexatious. This finding satisfies the plain language of the statute, and the imposition of sanctions in such a situation is not clearly erroneous or contrary to law. Although the Magistrate Judge did not hold a hearing, counsel for plaintiff was given an opportunity to show cause as to why sanctions should not be imposed. See KAPCO Mfg., 886 F.2d at 1494-95 (noting that due process requirements of notice and an opportunity to be heard are applicable to a proceeding to impose sanctions, but that the right to a hearing in such cases is limited to instances where a hearing could assist the court in its decision).

ORDER

Based on the foregoing, all the records, files, and proceedings herein, IT IS HEREBY ORDERED that the Order of the Magistrate Judge dated August 27, 2003 [Docket No. 23] is AFFIRMED.

IT IS FURTHER ORDERED that counsel for the plaintiff shall remit $985.70 to the Clerk of Court. The Clerk shall forward the sum to counsel for defendant Bank of America.