Danubis Group, LLC v. Landmark American Insurance Company
685 F. App'x 792
| 11th Cir. | 2017Background
- Danubis Group, through attorney Kevin Ambler, sued Landmark for underpaid commercial lost-rent claim based on a 2010 affidavit purportedly from Metzger; complaint alleged a five-year lease and $156,000 in damages.
- Landmark removed to federal court; Ambler repeatedly failed to respond to jurisdictional and merits discovery, missed court deadlines, submitted unsworn responses, and produced voluminous documents late (including a 450‑page adjuster file).
- Landmark discovered Metzger recanted the 2010 affidavit (calling the signature a forgery) and moved to dismiss for fabrication of evidence and fraud; the magistrate ordered an evidentiary hearing and warned counsel they could be sanctioned for any participation in fraud.
- Hearing testimony supported collusion by Danubis’s principal (Radulovic) with Metzger to fabricate a lease and induce an insurance payout; the magistrate found Ambler an unwitting agent whose reckless failure to investigate made him complicit.
- The magistrate recommended dismissal and monetary sanctions under Rule 11, Rules 16(f) and 37(b), 28 U.S.C. § 1927, and the court’s inherent power; the district court adopted the recommendation and awarded Landmark fees/costs totaling about $78,903.20 plus costs, apportioning liability jointly and severally to Danubis and Ambler.
- On appeal Ambler challenged notice, Rule 11 application to a pre-removal complaint, the amount of fees (lodestar rates and hours), lack of consideration of his ability to pay, and joint-and-several apportionment for statutory fees under Fla. Stat. § 768.79.
Issues
| Issue | Plaintiff's Argument (Ambler) | Defendant's Argument (Landmark) | Held |
|---|---|---|---|
| Adequacy of notice before Rule 11/inherent-power sanctions | Court failed to provide show-cause notice that his pre‑complaint investigation could be sanctioned | Evidentiary‑hearing order and prior warnings put Ambler on notice sanctions could follow for any participation in fraud | Court: substantial compliance with Rule 11 notice; adequate notice was given; affirmed |
| Rule 11 applicability to complaint filed in state court | Rule 11 cannot apply to pleadings filed pre-removal | Subsequent federal filings continuing the baseless suit are sanctionable under Rule 11 | Court: Rule 11 sanctions permissible because post-removal federal filings and continued defense of the complaint supported Rule 11 liability; affirmed |
| Reasonableness of attorney‑fee award (lodestar: rates and hours) | Magistrate erred in rate selection for low-level associate and in hours; Ambler’s expert supported lower rates | Magistrate cut hours and set rates based on court expertise; some reductions were applied | Court: magistrate’s hours reductions largely justified, but remanded to explain and justify low‑level associate rate ($125) with principled reasons; vacated part of amount and remanded |
| Apportionment and consideration of ability to pay | Court failed to consider Ambler’s individual ability to pay and improperly made him jointly & severally liable for statutory fees under Fla. Stat. § 768.79 | Sanctions should be shared because Ambler’s conduct contributed to litigation costs | Court: must consider Ambler’s ability to pay; cannot saddle Ambler with fees that statute (§ 768.79) assigns only to plaintiff; remanded to reassess amount and apportionment |
Key Cases Cited
- Amlong & Amlong, P.A. v. Denny’s, Inc., 500 F.3d 1230 (11th Cir.) (abuse of discretion review for sanctions)
- Kaplan v. DaimlerChrysler, A.G., 331 F.3d 1251 (11th Cir.) (Rule 11 show‑cause notice requirements and substantial‑compliance standard)
- In re Mroz, 65 F.3d 1567 (11th Cir.) (due‑process requirement to warn attorney of sanctionable conduct)
- Worldwide Primates, Inc. v. McGreal, 26 F.3d 1089 (11th Cir.) (Rule 11 does not apply to pleadings filed before removal but subsequent federal filings may be sanctionable)
- Norman v. Hous. Auth. of Montgomery, 836 F.2d 1292 (11th Cir.) (lodestar approach; district court must give principled reasons for fee determinations)
- Martin v. Automobili Lamborghini Exclusive, Inc., 307 F.3d 1332 (11th Cir.) (court must consider sanctionee’s ability to pay)
- Pensacola Motor Sales Inc. v. E. Shore Toyota, LLC, 684 F.3d 1211 (11th Cir.) (invited error doctrine)
- Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.) (factors for fee reasonableness consideration)