Farmer Ex Rel. Estate of Farmer v. Banco Popular of North America
2015 U.S. App. LEXIS 11273
| 10th Cir. | 2015Background
- Farmer, a Colorado resident and licensed attorney representing himself, sued Banco Popular over a HELOC dispute; the parties placed a settlement on the record on June 15, 2012.
- Under the settlement Banco would pay Farmer $30,000 and Farmer would pay Banco approximately $137,380.94 by October 15, 2012; Farmer repeatedly sought changes and delays and refused to sign the written agreement.
- Banco moved to enforce the settlement; the district court (after hearings and a magistrate recommendation) ordered enforcement, Farmer appealed, and this Court affirmed that enforcement.
- On remand Banco renewed motions seeking contempt and an award of attorney’s fees and costs for Farmer’s protracted refusal to execute and perform; Farmer then tendered the settlement payment but Banco sought sanctions for fees and costs it incurred during the delay.
- The district court found Farmer acted in bad faith, unreasonably and vexatiously multiplied the proceedings, and awarded Banco fees and costs (primarily under the court’s inherent authority and § 1927); the Tenth Circuit affirmed but modestly reduced the monetary award and directed disciplinary proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the district court retain jurisdiction on remand to enforce the settlement and impose sanctions? | Farmer: remand deprived the district court of jurisdiction to enforce or sanction. | Banco: district court retained jurisdiction while the underlying case remained pending; sanctions are collateral and permissible. | Court: District court had jurisdiction; prior appeal was interlocutory and collateral sanctions are permissible. |
| Did the settlement clause waiving attorneys’ fees bar a court‑imposed sanction awarding procedural fees? | Farmer: Paragraph 6 waived Banco’s right to recover attorneys’ fees, precluding sanctions. | Banco: agreement waived substantive fee-shifting but cannot preclude court’s inherent authority to sanction bad-faith litigation. | Court: Waiver did not bar procedural fee-shifting under the court’s inherent power; sanctionable conduct may not be contractually immunized. |
| Was the district court’s reliance on inherent authority and § 1927 appropriate to sanction Farmer for delay and bad faith? | Farmer: Court should have identified and tied sanctions to specific pleadings and § 1927 violations; remand required for granular allocation. | Banco: Farmer’s conduct went beyond pleadings; inherent power is appropriate to address broader abuses of process. | Court: Use of inherent authority was appropriate; no abuse of discretion in relying on inherent power to punish the full pattern of bad-faith conduct. |
| Were the amount and method of the fee/cost award reasonable? | Farmer: Court failed to tailor award to discrete filings and over-assessed; some items related to appeal or pre-trigger date. | Banco: Lodestar approach to post‑trigger fees reasonable; award should include fees from July 2, 2012. | Court: Lodestar and July 2, 2012 trigger were reasonable; reduced award slightly to remove appellate and pre‑trigger items; total sanction $50,824.53. |
Key Cases Cited
- Chambers v. Nasco, Inc., 501 U.S. 32 (1991) (court’s inherent power authorizes sanctions for abuse of the judicial process)
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994) (limits on district court jurisdiction to enforce settlements absent independent basis)
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990) (sanctions as collateral matters separate from merits)
- Shoels v. Klebold, 375 F.3d 1054 (10th Cir. 2004) (trial court power to summarily enforce settlements while litigation pending)
- Towerridge, Inc. v. T.A.O., Inc., 111 F.3d 758 (10th Cir. 1997) (bad-faith litigation conduct may warrant sanctions)
- Scottsdale Ins. Co. v. Tolliver, 636 F.3d 1273 (10th Cir. 2011) (distinguishing substantive fee-shifting from procedural fee-shifting)
- White v. General Motors Corp., 908 F.2d 675 (10th Cir. 1990) (standards for assessing reasonableness and deterrence in fee sanctions)
- Johnson v. Smith (In re Johnson), 575 F.3d 1079 (10th Cir. 2009) (abuse-of-discretion review for sanctions)
- Stan Lee Media, Inc. v. Walt Disney Co., 774 F.3d 1292 (10th Cir. 2014) (appellate authority to affirm on any grounds supported by the record)