Jean Marie ANDERSON; Shawn Guse; Angela Guse; Allen L. Friedland; Jason M. Beeks; Patricia G. Mikelson, Plaintiffs-Appellants v. CITIMORTGAGE, INC.; Mortgage Electronic Registration Systems, Inc.; Merscorp, Inc.; Resi Whole Loan II LLC; Citigroup Global Markets Realty, Inc.; Federal Home Loan Mortgage Corporation; Usset, Weingarden and Liebo, P.L.L.P., Defendants-Appellees.
No. 12-3835.
United States Court of Appeals, Eighth Circuit.
Submitted: June 17, 2013. Filed: July 26, 2013.
723 F.3d 415
Richard Caldarone, Mayer & Brown, Washington, DC, Hans Germann, Maritoni Derecho Kane, Lucia Nale, Thomas V. Panoff, Mayer & Brown, Chicago, IL, Kelly Hoversten, John Lester Krenn, Gray & Plant, Minneapolis, MN, for Defendant-Appellee.
Before MURPHY, SHEPHERD, and KELLY, Circuit Judges.
Attorney William Butler appeals the district court‘s1 order imposing sanctions against him under its inherent authority to discipline attorneys and impose sanctions. This is another case in a long line of lawsuits brought by Butler in Minnesota on behalf of homeowners challenging mortgage foreclosures. See, e.g., Butler v. Bank of Am., N.A., 690 F.3d 959 (8th Cir. 2012).
Butler represents six homeowners (collectively, “the homeowners“) against several mortgage lenders and servicers (collectively, “the lenders“), alleging that the lenders unlawfully foreclosed or attempted to foreclose upon their homes.2 After the homeowners filed this matter in Minnesota state court, the lenders removed the case to federal court pursuant to
The district court referred the homeowners’ motion to remand to a magistrate judge3 pursuant to
The lenders subsequently moved for sanctions against Butler pursuant to
Butler appeals the sanctions imposed. “We review a district court‘s imposition of sanctions under its inherent power for an abuse of discretion.” Stevenson v. Union Pac. R.R. Co., 354 F.3d 739, 745 (8th Cir. 2004) (internal quotation and alteration marks omitted). “A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence.” Plaintiffs’ Baycol Steering Comm. v. Bayer Corp., 419 F.3d 794, 802 (8th Cir. 2005) (internal quotation marks omitted). A district court‘s inherent powers “must be exercised with restraint and discretion,” but allow for district courts “to fashion an appropriate sanction for conduct which abuses the judicial process.” Chambers v. NASCO, Inc., 501 U.S. 32, 44-45, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991). This includes assessing “attorney‘s fees when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Id. at 45-46, 111 S.Ct. 2123 (internal quotation marks omitted). A party may demonstrate bad faith when it delays or disrupts litigation. Id. at 46, 111 S.Ct. 2123. Finally, before imposing sanctions, “the individual must receive notice that sanctions against her are being considered and an opportunity to be heard.” Bayer Corp., 419 F.3d at 802.
Butler argues he did not receive notice that the district court was considering imposing sanctions pursuant to its inherent authority.4 We disagree. The lenders’ motion for sanctions and supporting memorandum clearly stated that the motion was based in part upon the district court‘s inherent authority. See Appellees’ Mot. for Sanctions 1, ECF No. 46; Appellees’ Mem. in Supp. of Mot. for Sanctions 7, ECF No. 47. Before the hearing on this motion, the district court issued a notice to the parties, including Butler, informing the parties that it would be considering the motion for sanctions based upon, among
Next, Butler contends that he did not act in bad faith by filing a motion to remand on behalf of the homeowners. After briefing and a hearing, the district court found Butler‘s arguments were plainly frivolous. The district court reasoned that “Butler clearly knows that his Motion for Remand would have no more success than the same motion in Blaylock.” Butler contends that he should not be responsible for following the district court‘s order in that case, Blaylock v. Wells Fargo Bank, N.A., Civil No. 12-693 ADM/LIB, 2012 WL 2529197 (D.Minn. June 29, 2012), because it was not decided until after he filed the motion to remand in this case. The district court‘s bad-faith finding, however, was not based solely on Blaylock; instead, the district court noted that the motion to remand was “plainly frivolous,” ignored opposing counsel‘s Rule 11 letter, and reflected Butler‘s “continued unwillingness to abide by the rules.” Thus, the district court did not abuse its discretion because the district court‘s reliance on the frivolous nature of the underlying motion to remand is sufficient to support a bad-faith finding.
In calculating the appropriate award of attorneys’ fees in this case, the district court did not receive testimony or require the lenders to submit affidavits outlining the work done responding to the homeowners’ motion to remand. Instead, the district court found that the lenders had estimated their fees at $14,625 based on the lenders’ attorney‘s statement at oral argument.5 The district court determined that requiring the lenders’ attorneys to prepare affidavits specifying the time spent on the motion to remand would only further prolong the litigation, increasing attorneys’ fees.
We conclude the district court abused its discretion in acting on the unsworn oral estimate offered by counsel in open court. Instead, the district court should have required affidavits and records from the attorneys relating to the time spent on the homeowners’ motion to remand and made findings of fact with respect to the attorneys’ fees and costs incurred by the lenders. “We do not doubt the veracity of [lenders‘] counsel but counsel has a duty to produce specific documentation related to [the motion to remand] that does not overlap with the . . .” other work performed in this matter. See White v. Kelsey, 935 F.2d 968, 970 (8th Cir. 1991) (remanding case for specific findings regarding attorneys’ fees after trial court accepted attorneys’ oral statements regarding their fees).
Accordingly, we: (1) affirm the district court‘s finding that Butler filed the motion to remand in bad faith; (2) vacate the $5,000 sanction for attorneys’ fees; and (3) remand the matter for the district court to make specific findings as to the lenders’ fees and costs incurred responding to the homeowners’ motion to remand.