634 So. 2d 1190 | La. Ct. App. | 1993
Lead Opinion
Gulf Coast Bank filed this executory process suit against its debtor, Douglas J. Robi-no, Sr. During the course of the litigation, and prior to the sheriffs sale, the Bank filed a rule for damages, sanctions, and attorney’s fees under La.C.C.P. Art. 863 against Robino and his attorney, Mr. George Tate. After the sheriffs sale, the trial court conducted a hearing on the Bank’s motion and granted the relief requested. Robino and Tate appealed the trial court’s judgment against them, and the Bank answered the appeal, seeking an award of attorney’s fees for ser
FACTS
An action for sanctions which pertains to the signing and filing of pleadings is governed by La.C.C.P. Art. 863, which provides in pertinent part:
Art. 863. Signing of pleadings, effect
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B. Pleadings need not be verified or accompanied by affidavit or certificate, except as otherwise provided by law, but the signature of an attorney or party shall constitute a certification by him that he has read the pleading; that to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact; that it is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
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D. If, upon motion of any party or upon its own motion, the court determines that a certification has been made in violation of the provisions of this Article, the court shall impose upon the person who made the certification or the represented party, or both, an appropriate sanction which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, including a reasonable attorney’s fee.
E. A sanction authorized in Paragraph D shall be imposed only after a hearing at which any party or his counsel may present any evidence or argument relevant to the issue of imposition of the sanction.
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In its action for sanctions, the Bank complained of a certain pleading filed on behalf of Robino which was entitled, “Verified Intervention of Douglas J. Robino, Sr. seeking TRO and Injunctions.”
The transcript of the hearing and the exhibits submitted reveal the following facts. Robino borrowed money from the Bank in 1987 and secured the debt with certain collateral, including his home and his shrimp boat. Sometime thereafter, Robino went into bankruptcy. His shrimp boat was auctioned, and the proceeds were applied to Robino’s debt to the Bank.
In July of 1990, Robino evidenced an intent to dismiss his bankruptcy proceeding. Accordingly, on July 10, 1990, the Bankruptcy Court issued an order which would allow the Bank to proceed via executory process, in satisfaction of the remaining debt owed by Robino. The bankruptcy case was dismissed, and on October 10, 1990, the Bank filed suit for executory process. The sheriffs sale was scheduled for December 5, 1990.
On the morning of December 5, 1990, Ro-bino filed another bankruptcy petition. An automatic stay of all legal proceedings involving Robino was issued, and the sheriffs sale was cancelled. On March 1, 1991, the bankruptcy trustee moved to dismiss,
The sheriffs sale in the Bank’s executory process suit was then rescheduled for May 29, 1991. On the morning of May 29, Robi-no’s attorney filed the intervention, request
Robino’s intervention was premised on the need for an accounting and the pending private sale of his home. However, the suit for executory process had been filed eight months before, giving Robino plenty of time to ask for an accounting prior to the sheriffs sale. And the private sale of the home never materialized. Furthermore, neither Robino nor his counsel ever paid the filing cost for the intervention, nor did they attempt at that time to proceed in forma pauperis. The motion was never set for hearing, and the TRO expired after 10 days. The sheriffs sale was then rescheduled for August 14, 1991.
On August 7, Robino’s counsel sent a notice of deposition to the Bank’s counsel stating that the Bank’s deposition would be taken on August 12. The Bank’s counsel had a previously scheduled court appearance on that date; he moved for a protective order and offered to reschedule the deposition on August 13. The protective order was granted and the court ordered that the deposition be continued indefinitely.
On August 13, 1991, Robino filed a third bankruptcy petition. An automatic stay was issued, and the sheriffs sale set for August 14 was cancelled. Counsel for the Bank was not notified of the stay until moments before the sale was to take place. Later in the day, on August 14, the bankruptcy judge dismissed Robino’s petition ex parte, noting that the filing was a clear abuse of process as it violated the 180 day rule imposed in the April 9 order. The judge also denied a motion to reconsider the dismissal which was filed on August 26. The sheriffs sale was then rescheduled for September 25, 1991.
On September 24, Robino’s counsel moved to have the sheriffs sale reset. This motion was denied, and Robino’s writ application to this court was likewise denied. The sheriffs sale finally took place on September 25, and Robino’s property was purchased by his attorney, George Tate. The proceeds of the sale satisfied the entirety of Robino’s debt to the Bank.
The Bank’s rule for damages, sanctions, and attorney’s fees was heard on September 30, and the Bank was awarded $8,937.00 as damages and expenses.
DISCUSSION
In reviewing a trial court’s factual findings under La.C.C.P. Art. 863, an appellate court must apply the manifest error or clearly wrong standard of review. Murphy v. Boeing Petroleum Services, Inc., 600 So.2d 823 (La.App. 3d Cir.1992); Romero v. Chris Crusta Flying Service, Inc., 587 So.2d 803 (La.App. 3d Cir.1991).
In his reasons for ruling, the trial court made the following factual findings:
The Court finds that defendant and his attorney’s actions were not only meant to delay the ultimate result of the executory process as admitted, but those actions were timed purposefully to harass plaintiff and increase the costs of the proceedings. The fact that defendant continually and purposefully took these actions at the very last possible moment was especially frustrating to the legal process.
The trial judge sanctioned Robino and his attorney for actions taken in state court, not in Bankruptcy Court. On appeal, Robino and Tate contend the trial court erred in imposing sanctions as a result of two state court filings: the intervention seeking a TRO and the writ application to the Third Circuit.
The first question we must address is whether the TRO obtained by Robino was sought in good faith; that is, whether it was warranted by existing law or was sought merely for harassment or dilatory purposes. A cursory review of the pertinent provisions of the Code of Civil Procedure reveals that a TRO shall not issue to arrest the seizure and sale of immovable property. La.C.C.P. Art. 2752. Rather, a defendant may apply for a preliminary injunction in accordance with La. C.C.P. Art. 3602. La.C.C.P. Art. 3601 provides for the issuance of a TRO during the pendency of an action for injunction; however, that is a general provision that is overridden by exceptions stated elsewhere in the code, such as Article 2752. Clearly, Robino’s
Further, the factual background of this case indicates that the pleading was filed for both harassment and dilatory purposes. Ro-bino’s stated grounds for the TRO (that an accounting was necessary and a sale was pending) were not grounded in law and do not explain the dilatory nature of the filing. Had Tate acted timely on behalf of his client, he would have sought a preliminary injunction or some other appropriate remedy. The fact that Tate was unsuccessful in his attempts to find out certain accounting information from the Bank, if that is indeed correct, does not justify or in any way excuse his actions in filing a pleading in violation of Article 863.
The trial court made a factual finding that Article 863 had been violated. He awarded damages and attorney’s fees as allowed under that statute and in an amount that was well within his discretion.
We mention briefly Robino’s reference to the Third Circuit writ application. In his pretrial memo filed immediately prior to the hearing on the motion for sanctions, counsel for the Bank mentioned the writ application as another basis for sanctions. The trial judge, however, did not refer to the writ application in his reasons for ruling, and the application is not a part of the record on appeal. Therefore, we decline to consider whether Robino’s attorney again violated Article 863 by filing a writ application to this court.
The Bank has asked for a reasonable attorney’s fee for defending this appeal. Such a fee is warranted in this case, and we have determined that $1,000 is an appropriate amount. See Romero, supra.
DECREE
For the foregoing reasons, the judgment of the trial court is amended to award Gulf Coast Bank additional attorney’s fees in the amount of $1,000. In all other respects, the judgment is affirmed. Costs of this appeal are assessed to Douglas J. Robino, Sr. and George Tate.
AFFIRMED, AS AMENDED.
SAUNDERS, J., dissents and assigns reasons.
. The Bank also complained of certain bankruptcy filings made by Robino's counsel, but the trial court found that any filings made in U.S. Bankruptcy Court would be actionable only in that court, not in state court.
. The motion to dismiss was based on the following grounds:
(1) unreasonable delay by the debtor was prejudicial to creditors; (2) the debtor failed to make payments pursuant to the plan; (3) the debtor failed to make a payment within 30 days of filing his plan; and (4) the debtor failed to show up at a hearing.
. The question of attorney’s fees under La.C.C.P. Art. 3608 has also been raised. Under the jurisprudence interpreting that statute, attorney's fees for the wrongful issuance of a TRO can be awarded only if the hearing for dissolution is held before the TRO expires. In the case before us, attorney's fees have been awarded under Article 863, not under Article 3608. The Bank did not attempt to have the TRO dissolved and did not seek damages or attorney's fees for the wrongful issuance of the TRO. Rather, the Bank sought damages and attorney’s fees for the filing of the intervention, which filing was found to be in violation of Article 863.
Dissenting Opinion
dissenting.
The hearing on Robino’s motion for injunc-tive relief was moot by the time it was heard by the trial court on September 30,1991, due to the fact that the property in question was sold on September 25, 1991. Consequently, the substantive issue of the merits of Robi-no’s request for a TRO and injunctive relief was never determined by the trial court. It is well settled that attorney’s fees are not allowed “if the hearing for dissolution is not held before the TRO expires....” United Gas Pipe Line Co. v. Caldwell, 590 So.2d 724, 726 (La.App. 3d Cir.1991). Nevertheless, the majority awards sanctions under the general provision of LSA-C.C.P. art. 863, although it is clear that under LSA-C.C.P. art. 3608 and the jurisprudence dealing specifically with wrongful issuance of a TRO, attorney’s fees would not be available. See United Gas Pipe Line Co. v. Caldwell, supra, and cases cited therein.
Contrary to the assertion of the Bank, Robino and his attorney argue that they were not attempting to arrest the sale under LSA-C.C.P. art. 2751, which does not allow a TRO to issue to arrest the seizure and sale of immovable property. See LSA-C.C.P. art. 2752(A). Rather, Robino and Tate contend that they were seeking equitable relief via an injunction under LSA-C.C.P. art. 3601, which allows the issuance of a TRO during the pendency of an action for an injunction.
An injunction shall issue in cases where irreparable injury, loss, or damage may otherwise result to the applicant, or in other cases specifically provided by law;
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During the pendency of an action for an injunction the court may issue a temporary restraining order, a preliminary injunction, or both, except in cases where prohibited, in accordance with the provisions of this Chapter.
A proper award of sanctions, pursuant to LSA-C.C.P. art. 863, is reserved for the limited situation in which a party has incurred unjustified expenses due to pleadings filed in the state district court which have been signed and certified by opposing counsel as being in good faith.
The obligations imposed upon litigants and their counsel who sign a pleading is to make an objectively reasonable inquiry into the facts and the law.
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Article 863 is intended only for exceptional circumstances and is not to be used simply because parties disagree as to the correct resolution of a legal matter. See, Gaiardo v. Ethyl Corporation, 835 F.2d 479 (3rd Cir.1987), citing Morristown Daily Record, Inc. v. Graphic Communications Union Local 8N, 832 F.2d 31 (3rd Cir.1987). Furthermore, noting [sic] in the language of Rule 11 or Article 863 empowers the district court to impose sanctions on lawyers simply because a particular argument or ground for relief is subsequently found to be unjustified. Gaiardo, supra, citing Golden Eagle Distributing Corporation v. Burroughs Corporation, 801 F.2d 1531 (9th Cir.1986). Failure to prevail does not trigger a sanction award. Gaiar-do, supra.
In determining a violation of Rule 11 or Article 863 the trial court should “avoid using the wisdom of hindsight and should test the signer’s conduct by inquiring what was reasonable to believe at the time the pleading, motion or other paper was submitted.” Gaiardo, supra at 484.
Fairchild v. Fairchild, 580 So.2d 513, 516, 517 (La.App. 4th Cir.1991) (emphasis in original).
Most appropriate to this ease are the sentiments of the Fourth Circuit in Junot v. Lee, 372 So.2d 707, 710 (La.App. 4th Cir.), writ denied, 375 So.2d 944 (La.1979), which are applicable to the present case:
To hold that an attorney who files pleadings, numerous or otherwise, in support of his client’s position has acted overzealously in his client’s behalf, and therefore is hable in damages to the other litigant or litigants because those pleadings have little or no merit, would result in an undesirable chilling effect on the attorney’s efforts to properly represent and support his client. If an attorney did not properly represent and support his client, he could be subjected to a suit for malpractice.
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Finally, we analogize the matter before us to cases involving damages requested for frivolous appeal. The Supreme Court’s standard for such an award is found in Parker v. Interstate Life & Accident Insurance Co., 248 La. 449, 179 So.2d 634, 636-637:
“.... it is patent that, when appellate courts are required to assess the sincerity of counsel (or lack thereof) in the stand he advocates, they are dealing in a most nebulous area of subjective beliefs which cannot be determined, save in extremely exceptional circumstances, by judicial rejection of the claim as unsound. For, here, we are not attempting to judge a legal right or wrong but, rather, the truth of an asserted belief in a contention. Accordingly, when counsel proclaims his sincerity, a court finds itself without just cause to disbelieve unless, and only unless, the proposition advocated is so ridiculous or so opposed to rational thinking that it is evident beyond any doubt that it is being deliberately professed for ulterior purposes.”
Although I do not find that an award of sanctions is warranted in this case, assuming arguendo that they are, an award of $8,937.00 as “damages and expenses,” constitutes an extreme abuse of discretion on the
The damages were apportioned as follows: expenses, harassment and other damages— $1,750.00; additional attorney’s fees— $6,187.00; attorney’s fees for the motion for sanction hearing — $1,000.00.
The record was devoid of evidence as to the expenses of resetting of the sale which had been set aside due to Robino’s intervention. The trial court’s figure of $1,750.00 appears to arise from “Exhibit D-6,” which is a notice of final accounting dated July 31, 1990 (prior to any proceeding at issue herein), which set out the expenses of selling Robino’s shrimp boat at a bankruptcy auction as $1,750.31, which were paid from that prior disbursement. Since this amount pre-dates the “one pleading,” this amount should not be allowed.
As to the award of $6,187.00 in attorney’s fees, as a sanction for the filing of one pleading, Ms. Gerdy Banchard, a loan supervisor and vice-president at Gulf Coast, testified that the Bank owed its attorneys approximately this amount in attorney’s fees, even after the Sheriffs sale. Apparently, this testimony is the source of the trial court’s award of $6,187.00 in attorney’s fees. Furthermore, Banchard testified to three prior and separate payments of attorney’s fees to-talling $5,922.27. In addition, $9,899.75 was paid to the attorneys for the Bank as part of the disbursement from the Sheriffs sale. Together, these fees which were paid to the Bank’s attorneys total $15,822.02. Clearly, the trial court’s award of an additional $6,187.00 in attorney’s fees, totalling $22,-009.00 paid mainly for the collection of a $36,000.00 debt, is excessive. Especially this is true in light of the fact that the hearing on the motion for sanctions was the only contested hearing which the Bank’s attorneys attended.
Robino should not have been sanctioned more than the amount that was necessary in expenses and attorney’s fees, to reset the Sheriffs sale. The amount awarded by the trial court and affirmed by this court, in the majority opinion, includes all that was owed to the Bank’s attorneys for their work in both the bankruptcy and state district forums, as shown by the plaintiffs attorney’s time sheet which is of record.
As stated by the United States District Court for the Middle District of North Carolina in Chalmers v. Petty, 136 F.R.D. 399, 407 (M.D.N.C.1991):
In determining the amount of sanctions, the Court must be mindful that Rule 11 should not be used to merely shift fees but rather, its purpose is to impose sanctions. Id. [In re Kunstler, 914 F.2d 505] at 522-25. [4th Cir.1990]. The primary purpose of Rule 11 is to deter future abuses with the additional, multiple purposes of compensating victims and preserving judicial functioning and management. The Court should impose the minimum amount needed to deter, and consider the ability to pay and the severity of the violation. Id. In calculating the reasonable attorney’s fees incurred by the innocent party, the Court may only look to attorney time incurred which was in response to the conduct which is to be sanctioned. Sanctions can only be assessed based on reasonable expenditures of time and the monetary sanction should never be based solely on this time. Id. Finally, the Court is not restricted to monetary penalties should non-monetary sanctions be appropriate in a given case. Id.
Additionally, the trial court awarded $1,000.00 additional attorney’s fees for the motion for sanctions, which brings the total which the Bank has collected from Robino to pay its attorneys to $23,000.00. The general rule is that attorney’s fees which are awarded for a violation of Rule 11 (LSA-C.C.P. art. 863), include compensation for the expense generated by the Rule violation, i.e., the pleading being sanctioned, and not for the expense of bringing the motion for sanctions. See Unanue Casal v. Unanue Casal, 132 F.R.D. 146 (D.N.J.1989), affirmed 898 F.2d 839 (1st Cir.1990).
Under the facts of this case, sanctions were not warranted as to either Robino’s filing of the petition of intervention or for his filing of a notice of intention to apply for writs.
The true measure of any profession is the vigor and zeal given by its members to the interest of those they serve. An overzealous bar poses no threat to the ends of justice. One immobilized by timidity is, in my mind, a very real threat to those ends. Accordingly, I dissent.
. "Article 863 is derived from Rule 11, Federal Rules of Civil Procedure. The federal decisions afford us guidance for our interpretation and application.” Romero v. Chris Crusta Flying Service, 587 So.2d 803, 805 (La.App. 3d Cir.1991).
Rehearing
ON REHEARING
We granted a rehearing in this matter for the limited purpose of reviewing the amount of attorney’s fees awarded by the trial court.
The trial court awarded $6,187.00 as “additional attorney’s fees.” This amount represents an approximation of the extra fees incurred by the Bank as a result of the actions of the debtor and his attorney. In an effort to prove that extra fees were incurred, the Bank submitted a time sheet prepared by its attorneys showing the work that had been done on the collection of this debt, both in this executory proceeding and in the debtor’s bankruptcy proceedings which were instigated in an effort to delay the executory proceeding. The time sheet showed 161.75 hours, but it did not show the hourly rate at which the Bank was billed for this work.
The trial judge considered the time sheet offered into evidence and considered the testimony of a Bank employee who said that subsequent to the sheriffs sale, the Bank had spent approximately $6,200.00 in attorney’s fees which had not been rebated or otherwise collected. The trial judge considered this evidence and determined that $6,187.00 would be an appropriate amount to compensate the Bank for the extra attorney’s fees incurred as a result of the actions of the debtor and his attorney. This amount was not proved at trial .to be the actual amount of extra fees incurred.
La.C.C. Art. 863 provides for the imposition of an appropriate sanction which may include the award of reasonable attorney’s fees. In Derouin v. Champion Ins. Co., 580 So.2d 1043 (La.App. 3d Cir.1991), writ denied, 585 So.2d 574 (La.1991), this court concluded that the reasonableness finding must also include the goals of deterrence, punishment, and compensation. Furthermore, the determination of reasonable attorney’s fees is within the trial court’s great discretion.
In this case, the trial judge was presented with evidence of attorney’s fees, a portion of which were apparently incurred in the bankruptcy proceedings. However, those fees were not clearly and unambiguously distinguished from the fees incurred by the Bank in the state court proceeding. The parties did not categorize of otherwise distinguish the fees for the trial court’s benefit. Therefore, we conclude the trial judge may have inadvertently based the award of “additional attorney’s fees” partially on the fees incurred in the bankruptcy proceedings. Accordingly, given this scenario, we believe the award should be reduced.
We have again reviewed the evidence in detail. We find that approximately 25% of the charges reflected on the time sheet prepared by the Bank’s attorneys are for the bankruptcy work. Therefore, we reduce the award made by the trial court by $1,500.00 or approximately 25%.
DECREE
The trial court’s award in favor of Gulf Coast Bank and against Douglas J. Robino, Sr. and George Tate is hereby reduced by
AFFIRMED, AS AMENDED.
SAUNDERS, J., dissents for the reasons assigned in his original dissenting opinion.
