KAASS LAW, Appellant, v. WELLS FARGO BANK, N.A., a National Association, Appellee.
No. 13-56099
United States Court of Appeals, Ninth Circuit
August 27, 2015
Argued and Submitted April 6, 2015.
Before: ANDREW J. KLEINFELD, M. MARGARET McKEOWN, and MILAN D. SMITH, JR., Circuit Judges.
*
*
*
Bank Melli has set forth numerous creative arguments as to why it shouldn‘t be liable for Iran‘s debt. But this is an arena in which Congress has spoken with unmistakable clarity. Section 201 of the TRIA and
AFFIRMED.
Vahag Matevosian (argued), Armen Kiramijyan, Kaass Law, Glendale, CA, for Appellant.
Kerry W. Franich (argued), Severson & Werson, Irvine, CA; Jan T. Chilton, Severson & Werson, San Francisco, CA, for Appellee.
M. SMITH, Circuit Judge:
In this appeal, Appellant Kaass Law challenges the district court‘s decision to grant Appellee Wells Fargo‘s motion for sanctions against it pursuant to
FACTUAL AND PROCEDURAL BACKGROUND
I. The Complaint and Motion to Dismiss
On September 27, 2012, Armen Kiramijyan, an attorney with Kaass Law, filed a complaint on behalf of Plaintiff Izabell Manukyan against 10 different defendants, including Wells Fargo Bank. The complaint made various allegations relating to certain adverse information the defendants had reported to credit agencies, who then reflected the adverse information on Plaintiff‘s credit report. On October 29, 2012, Wells Fargo moved to dismiss Plaintiff‘s complaint pursuant to
On December 11, 2012, the district court granted Wells Fargo‘s motion to dismiss, and denied Plaintiff‘s motion to amend. The district court held that “Plaintiff‘s Complaint, as a whole, is procedurally deficient because it does not differentiate between Defendants and makes no mention of any specific acts made against an individual Defendant. Thus, on its face, the Complaint fails to comply with Rule 8 and fails to put Defendants on notice of their supposedly improper conduct.” The district court also held that Plaintiff‘s proposed amended complaint “does not rectify the Complaint‘s failure to comply with Rule 8, rendering amendment futile.”
II. Prior Proceedings in the Action for Sanctions
On March 21, 2013, the district court‘s judgment dismissing Wells Fargo from the
The district court granted the motion in part, and denied it in part. While the district court declined to award fees against the Plaintiff, it ruled that “Kaass Law acted in bad faith by knowingly raising frivolous arguments against Wells Fargo and other defendants,” and granted the motion against Kaass Law. The district court noted that “Wells Fargo provides sufficient evidence that Kaass Law acted in bad faith,” including “its failure to plead specific allegations or differentiate between defendants in the Complaint; its failure to oppose defendants’ motions to dismiss; and its failure to meet and confer or communicate with opposing counsel.” Additionally, the district court concluded that in attempting to file a first amended complaint, Kaass Law had “failed to correct the glaring pleading and legal errors identified by defendants, thereby recklessly and knowingly multiplying the proceedings in this action.”
The district court reduced the hours claimed by Wells Fargo‘s attorneys, Scott J. Hyman and David Berkeley, from 14.4 hours to 10 hours for Mr. Hyman, and from 22.5 hours to 18 hours for Mr. Berkeley, but then awarded Wells Fargo a total of $8,480 in attorneys’ fees.
This timely appeal followed.
STANDARD OF REVIEW AND JURISDICTION
We have jurisdiction over this appeal pursuant to
DISCUSSION
Kaass Law makes two principal arguments on appeal. It first contends that the district court abused its discretion by imposing sanctions pursuant to
I. Argument Raised for the First Time on Appeal
Initially, we must determine whether we can consider Kaass Law‘s argument concerning the permissibility of awarding sanctions against a law firm pursuant to
“Ordinarily, an appellate court will not hear an issue raised for the first time on appeal.” Cornhusker Cas. Ins. Co. v. Kachman, 553 F.3d 1187, 1191 (9th Cir. 2009) (internal quotation omitted). “There are, however, four exceptions to this rule, where: (1) there are exceptional circumstances why the issue was not raised in the trial court; (2) new issues have become relevant while the appeal was pending because of [a] change in the law; (3) the issue presented is purely one of law and the opposing party will suffer no prejudice as a result of the failure to raise the issue in the trial court; or (4) plain error has occurred and injustice might otherwise result.” United States v. Echavarria-Escobar, 270 F.3d 1265, 1267-68 (9th Cir.2001).
Kaass Law contends that because it “is not an attorney, nor is it a person admitted to conduct cases in courts, the district court erred in imposing sanctions against it pursuant to Section 1927.” Because this argument falls under the third exception noted in Echavarria-Escobar, we can consider it on appeal, and we need not consider the other exceptions. Whether a law firm may be sanctioned under
II. Sanctions Pursuant to 28 U.S.C. § 1927
The statutory language of
In Federal Trade Commission v. Alaska Land Leasing, Inc., we overturned sanctions awarded by a district court pursuant to 28 U.S.C. § 1927 against a financial consultant employed by attorneys representing two of the parties to the suit. 799 F.2d 507, 508-10 (9th Cir.1986). In vacating the sanctions, we held that “[s]ection 1927 does not authorize recovery from a party or an employee, but ‘only from an attorney or otherwise admitted representative of a party.‘” Id. at 510 (quoting 1507 Corp. v. Henderson, 447 F.2d 540, 542 (7th Cir.1971) (emphasis in original)). In Sneller v. City of Bainbridge Island, we also overturned an award of sanctions pursuant to § 1927 because “[t]he sanction here was imposed jointly on counsel and the client, but § 1927 authorizes sanctions only upon counsel.” 606 F.3d 636, 640 (9th Cir.2010).
In Claiborne v. Wisdom, the Seventh Circuit considered “whether a law firm is
Our conclusion has the virtue of being consistent with the rationale the Supreme Court used in Pavelic & Le Flore v. Marvel Entertainment Group, 493 U.S. 120 (1989), when it considered the question whether sanctions were possible against a law firm under an earlier version of
FED. R. CIV. P. 11 . (The rule was amended as of December 1, 1993, to ensure that law firms could be subject to sanctions under its authority.) In Pavelic & Le Flore, however, the Court had to construe language that permitted sanctions only against “the person who signed” the offending document.... The Supreme Court [found] that in context the phrase “the person who signed” could only mean the individual signer, not his partnership, either in addition to him or in the alternative. The language of § 1927 raises exactly the same problem as the earlier version of Rule 11. Id. at 723.
We find this reasoning persuasive. Indeed, as the Seventh Circuit observes,
The Sixth Circuit also found that “[e]ven if [a] firm[] can admittedly be personified in a literary sense through briefs, there is no reason to consider a law firm a ‘person’ under [§ 1927],” and confirmed that ”
We are not persuaded by the reasoning of those of our sister circuits that have upheld sanctions against law firms pursuant to
The Second Circuit permitted a district court to impose sanctions against a law firm, but seemed to buttress its reasoning on the inherent powers of the district court, not on the express language of
We disagree with [the law firm]‘s assertion that the District Court was without authority under
28 U.S.C. § 1927 to award sanctions against the “firm as a whole” for the “actions of various lawyers.” As an initial matter, the District Court imposed sanctions pursuant to both its inherent powers and § 1927. There is no serious dispute that a courtmay sanction a law firm pursuant to its inherent power. We see no reason that a different rule should apply to § 1927 sanctions, and, in any event, we have previously upheld the award of § 1927 sanctions against a law firm.... In sum, nothing in the language of 28 U.S.C. § 1927 , in our case law regarding that statute or a district court‘s inherent powers, or in counsel‘s actions in this case leads us to think that the District Court was without authority to impose sanctions on [the law firm] as a whole. Enmon v. Prospect Capital Corp., 675 F.3d 138, 147-48 (2d Cir.2012).
We believe the Second Circuit misconstrues the language of
Wells Fargo urges us to affirm because “the district court‘s sanctions award against Kaass is supported under” its “inherent authority.” But Wells Fargo did not request that the district court impose sanctions under its inherent authority, and the court only cited
The district court abused its discretion by sanctioning Kaass Law, a law firm, pursuant to
CONCLUSION
We reverse the decision of the district court, and vacate the order imposing sanctions against Appellant Kaass Law. Each party shall bear its own costs on appeal.
REVERSED.
Daniel BILL; Bryan Hanania; Michael Malpass, Plaintiffs-Appellants, v. Warren BREWER; Heather Polombo, Defendants-Appellees.
No. 13-15844.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted June 9, 2015.
Filed Aug. 31, 2015.