Clemmons v. Wells Fargo Bank, N.A.
680 F. App'x 754
| 10th Cir. | 2017Background
- Plaintiffs previously sued over the same mortgage dispute (Bowers I); the district court granted summary judgment for Wells Fargo and awarded fees; Tenth Circuit affirmed.
- While that appeal was pending, Plaintiffs filed a second state-court suit against Wells Fargo and its counsel Shapiro & Mock alleging substantially the same claims; defendants removed and moved to dismiss.
- District court dismissed the second action on claim preclusion and statute-of-limitations grounds, granted Wells Fargo Rule 11 sanctions against Plaintiffs’ attorney (Huffman) and awarded $5,000; Plaintiffs appealed.
- Defendants asserted removal jurisdiction based on diversity and federal-question jurisdiction; district court proceeded under diversity after establishing complete diversity based on LLC-members’ citizenship.
- The district court found Plaintiffs’ claims barred by Kansas claim preclusion rules and time bars (including KCPA limitations); it also found Huffman’s filing objectively unreasonable under Rule 11 given prior adjudication and court admonitions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction | Shapiro & Mock is a Kansas citizen, so diversity lacks | Shapiro & Mock is an LLC; citizenship is of members (not Kansas); diversity exists | Diversity jurisdiction proper; removal jurisdiction valid |
| Claim preclusion (res judicata) | New complaint differs (no MERS reference); some counts not litigated in Bowers I | Second suit reasserts claims that were or could've been raised in Bowers I; precluded by Kansas law | Claims barred by claim preclusion under Kansas law |
| Statute of limitations / Kansas savings statute | State claims preserved under K.S.A. 60-518; some claims accrued later | Savings statute inapplicable because prior state action was never properly "commenced"; claims accrued from earlier communications (Oct 2010) | Time-barred; savings statute inapplicable; claims accrued in 2010 |
| Rule 11 sanctions against counsel (Huffman) | Filing second suit was objectively justified; defendants failed to give proper notice and motive improper | Filing was objectively unreasonable given prior rulings and admonitions; adequate notice and opportunity were given | District court did not abuse discretion; Rule 11 sanction affirmed |
Key Cases Cited
- Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220 (10th Cir. 2004) (complete diversity and amount-in-controversy standards)
- Lewis v. Circuit City Stores, Inc., 500 F.3d 1140 (10th Cir. 2007) (federal court uses state claim-preclusion law in diversity cases)
- Gorsuch, Ltd. v. Wells Fargo Nat. Bank Ass’n, 771 F.3d 1230 (10th Cir. 2014) (bank citizenship for diversity under 28 U.S.C. § 1348)
- Lompe v. Sunridge Partners, LLC, 818 F.3d 1041 (10th Cir. 2016) (LLC citizenship determined by members)
- Coffey v. Healthtrust, Inc., 955 F.2d 1388 (11th Cir. 1992) (Rule 11 reasonableness inquiry requirement cited for counsel conduct)
- White v. General Motors Corp., 908 F.2d 675 (10th Cir. 1990) (attorney belief must align with what a reasonable competent attorney would believe under circumstances)
- Roth v. Green, 466 F.3d 1179 (10th Cir. 2006) (standard of review for Rule 11 sanctions)
- Laurino v. Tate, 220 F.3d 1213 (10th Cir. 2000) (notice of appeal can imply sanctioned attorney’s intent to appeal even if not named)