Mohammad H. Chaudhry Diana M. Chaudhry v. Michael G. Gallerizzo Gebhardt & Smith, James E. Kiley, Jr., Mohammad H. Chaudhry Diana M. Chaudhry v. Michael G. Gallerizzo Gebhardt & SmithMohammad H. Chaudhry Diana M. Chaudhry v. Michael G. Gallerizzo Gebhardt & Smith, James E. Kiley, Jr., Mohammad H. Chaudhry Diana M. Chaudhry v. Michael G. Gallerizzo Gebhardt & Smith
Affirmed by published opinion. Judge MURNAGHAN wrote the opinion, in which Judge LUTTIG and Judge KING joined.
OPINION
MURNAGHAN, Circuit Judge:
Plaintiffs, Mohammad and Diana Chaudhry, filed the present action against Defendants Michael Gallerizzo and his law firm, Gebhardt & Smith, in the United States District Court for the District of Maryland, alleging various violations of the Fair Debt Collection Practices Act (“FDCPA“),
NationsBank, N.A. is a national banking association which maintains an office in Bethesda, Maryland. NationsBanc Mortgage Corporation (“NMC“) is a national mortgage provider and is an affiliate of NationsBank, N.A. NMC‘s principal office is located in Dallas, Texas. NationsBank, N.A. and NMC are collectively referred to as “NationsBank.”
In 1994, the Chaudhrys decided to move from their home on Barnwood Lane (“Barnwood Home“) to a home they planned to build on Inglewood Drive in Potomac, Maryland (the “Inglewood Home“). After discussions with Richard Garrard, a NationsBank loan officer, the Chaudhrys took out a home equity line on their Barnwood Home to assist in the purchase of the lot for the Inglewood Home and obtained a construction loan from NMC for the actual construction of the Inglewood Home (the “Construction Loan“).1
When the Chaudhrys defaulted on the Construction Loan by, among other things, failing to pay the required monthly payments of interest, NationsBank transferred all of the Chaudhrys’ personal and business loans to Special Assets, a division of NationsBank, N.A. that deals with problem loans. Special Assets retained Gallerizzo and Gebhardt & Smith to represent the interests of NationsBank in connection with the Chaudhrys’ loan.
After Special Assets assumed responsibility, the Chaudhrys’ attorney, James Kiley, scheduled a meeting for December 21, 1995. The Chaudhrys, Kiley, Michael Fodel, a supervisor in Special Assets, and Gallerizzo met at the Virginia offices of NationsBank, N.A. Unknown to Gallerizzo or Fodel, Kiley taperecorded the meeting. Throughout the course of the meeting, Gallerizzo emphasized that no oral agreements could be made at the meeting and that NationsBank would not agree to anything unless the parties signed a written agreement containing a release of any claims the Chaudhrys believed they had against the bank. The Chaudhrys refused to agree to such a release. Gallerizzo also indicated that NationsBank might require the Chaudhrys to pay the full balance of the Construction Loan if no agreement were reached.2
After the December 21st meeting, Fodel instructed Gallerizzo to demand payment from the Chaudhrys. On December 22, 1995, Gallerizzo drafted a demand letter requiring the Chaudhrys to pay the amounts owed under the Construction Loan Documents within thirty days (the “Demand Letter“). The letter set forth the amount owed by the Chaudhrys for principal, interest and inspection fees. In addition, Gallerizzo advised the Chaudhrys that they were also obligated to reimburse the bank for all costs, expenses and attorneys fees which the bank incurred in connection with the matter. Gallerizzo did not demand payment of the attorneys fees or set forth a particular amount of attorneys fees.
On January 4, 1996, Kiley wrote to Gallerizzo, disputing the amounts that NationsBank claimed were due. Pursuant to the FDCPA, he requested that Gallerizzo verify the amounts claimed in the Demand Letter. After receiving Kiley‘s January 4th letter, Gallerizzo telephoned Jeffrey Richman, another bank representative in Special Assets, and requested that he confirm the sums that were owed for principal, interest and inspection fees. By letter dated January 18, 1996, Gallerizzo sent Kiley a verification of the indebtedness and assured Kiley that the Chaudhrys did, in fact, owe the verified sums. The next day, Gallerizzo again wrote to Kiley and set forth the amounts necessary to pay off the Construction Loan. Subsequently, in a telephone conversation, Gallerizzo asked Kiley whether he had the information he requested. Kiley responded that he had received everything he needed except for verification of the attorneys’ fees. Gallerizzo discussed with Richman the amount that NMC would accept from the Chaudhrys in payment of NMC‘s attorneys’ fees. On or about January 19, 1996, Richman instructed Gallerizzo to accept from the Chaudhrys $8,600, an amount less than the actual attorneys’ fees incurred by NMC through that date.
On January 22, 1996, Kiley wrote to Gallerizzo and indicated that he still needed verification of the attorneys’ fees. Relying on this letter and his earlier telephone conversation with Kiley, Gallerizzo forwarded copies of the legal bills of Gebhardt & Smith but did not forward any additional information regarding the inspection fees. Believing the legal bills contained privileged information, Gallerizzo used a black marker to redact portions of several time entries on the bills.
Also on January 22, 1996, the Chaudhrys’ settlement attorney, Diane Fox, forwarded a request to NationsBank for a payoff figure on the Construction Loan, claiming that a meeting to refinance the loan was scheduled on January 25, 1996. At the request of NationsBank, Gallerizzo forwarded to Fox a payoff letter dated January 24, 1996.
The Chaudhrys filed the present action on April 8, 1996, alleging violations of the FDCPA and common law fraud claims.3 At the initial pre-trial proceedings, the Chaudhrys demanded unredacted versions of Gebhardt & Smith‘s legal bills. The Chaudhrys also demanded the release of the Research Memorandum prepared by Gebhardt & Smith that discussed possible violations of federal statutes. When Gallerizzo objected to the disclosure of the information, the Chaudhrys filed motions to compel production.
District Judge Marvin J. Garbis reviewed in camera the unredacted legal bills and the Research Memorandum.4 With respect to the legal bills, Judge Garbis confirmed that the items redacted revealed the federal statutes researched by Gebhardt & Smith. The first statute researched was the FDCPA. Consequently, Judge Garbis upheld the claim of privilege but determined that, because the Chaudhrys had filed suit, there was no harm in disclosing the fact that Gallerizzo had researched the Act. However, Judge Garbis ruled that the other federal statute, which was the subject of the Research Memorandum, was privileged and refused to disclose the research. Judge Garbis produced a redacted version of the first page of the Research Memorandum which did not reveal the research conducted.
A split bench and jury trial commenced on October 27, 1997. At trial, the Chaudhrys, in part, argued that Gallerizzo had misled them at the December 21st meeting by indicating that he would provide them with the amount of interest due which, if paid, would cure the loan default. They also maintained that some of the legal fees demanded from them was for legal services unrelated to the loan default and, thus, not chargeable under the Construction Loan. With the agreement of counsel, the trial judge decided to submit to the jury limited special verdict questions on these two issues. The court first asked the jury if Plaintiffs had proven by a preponderance of the evidence that Gallerizzo had made false, deceptive, or misleading statements at the December 21st meeting. The court then asked if Plaintiffs had proven by a preponderance of the evidence that the legal fees demanded from them were in excess of the amount properly chargeable to them. The jury returned a verdict in favor of Gallerizzo on issue one, but ruled against him on issue two. With respect to issue two, the jury found that the fees were not properly chargeable to the Chaudhrys and that Gallerizzo had knowingly and intentionally attempted to collect the excessive amount. After a hearing on post-trial motions, the court denied the Chaudhrys’ motion for judgment as a matter of law as to issue one, granted Gallerizzo‘s motion for judgment as a matter of law on issue two, and entered judgment in favor of Gallerizzo on all other counts. On motion by Gallerizzo, the trial court granted sanctions against the Chaudhrys and their attorney for filing claims in bad faith and for the purpose of harassing Defendants. The Chaudhrys now appeal the district court determination.
A. Unredacted Legal Bills and Research Memorandum
The Chaudhrys first claim that the district court erred in refusing to grant their motions to compel Defendants to produce unredacted legal bills and the entire Research Memorandum. Appellants insist that Defendants improperly prevented the discovery of certain relevant information by asserting attorney-client and work product privileges, without establishing any factual basis proving the asserted privileges. We review the district court‘s decision that certain documents are subject to privilege de novo, since it involves a mixed question of law and fact. See In re Grand Jury Proceedings, 33 F.3d 342, 353 (4th Cir.1994).
Under the attorney-client privilege, confidential communications made between a client and an attorney in an effort to obtain legal services are protected from disclosure. Typically, the attorney-client privilege does not extend to billing records and expense reports. See id. at 353-54. In Clarke v. American Commerce National Bank, 974 F.2d 127 (9th Cir.1992), however, the Ninth Circuit distinguished between privileged and discoverable information contained in an attorney‘s billing records:
[T]he identity of the client, the amount of the fee, the identification of payment by case file name, and the general purpose of the work performed are usually not protected from disclosure by the attorney-client privilege. However, correspondence, bills, ledgers, statements, and time records which also reveal the motive of the client in seeking representation, litigation strategy, or the specific nature of the services provided, such as researching particular areas of law, fall within the privilege. Id. at 129 (citations omitted).
In Clarke, the court concluded that the billing records were discoverable because of the general nature of the information provided therein, e.g., information on the identity of the client, the case name for which payment was made, and the amount of the fee. Id. at 130. The attorney‘s bills in Clarke, unlike Gallerizzo‘s bills, contained “nothing [that] ... reveal[ed] specific research or litigation strategy which would be entitled to protection from disclosure.” Id. at 130; see also In re Grand Jury Proceedings, 33 F.3d at 354 (intimating that the determination as to whether attorney billing statements are privileged hinges on whether the statements reveal something about the advice sought or given). In the instant case, the legal bills revealed the identity of the federal statutes researched. Since the records would divulge confidential information regarding legal advice, they constitute privileged communications and, as such, should not be disclosed.
Furthermore, the work product doctrine prohibits the disclosure of the Research Memorandum. Under the work product rule, codified in
Appellants maintain that, even if the attorney-client privilege and work product doctrine apply, the exception for crimes, frauds, and torts also applies here. The exception provides that a confidential communication between attorney and client “will not be privileged if made for the purpose of committing or furthering a crime or fraud.” In re Grand Jury Proceedings, 33 F.3d at 348; see also In re Doe, 662 F.2d at 1079. Appellants allege that the redacted legal bills indicate that Defendants were attempting to collect amounts billed to NationsBank for the other disputes the Chaudhrys have with the bank, which are not collectible under the Construction Loan. Appellants maintain that they are entitled to copies of the unredacted legal bills and the Research Memorandum for use at trial because they evidence wrongdoing under the FDCPA.
Appellants, as the party asserting the crime/fraud exception, must make a prima facie showing that the privileged communications fall within the exception. Appellants must prove that “(1) the client was engaged in or planning a criminal or fraudulent scheme when he sought the advice of counsel to further the scheme and (2) the documents containing [the privileged materials] ... bear a close relationship to the client‘s existing or future scheme to commit a crime or fraud.” In re Murphy, 560 F.2d 326, 338 (8th Cir.1977); see also In re Grand Jury Proceedings, 33 F.3d at 349 n. 13 (quoting In re Murphy favorably). Appellants produced no evidence addressing either element of the required showing, so their claim must fail.
Under the circumstances, the district court did not abuse its discretion by denying Appellants’ motion to compel production of the unredacted legal bills and the Research Memorandum. See In re Grand Jury Proceedings, 33 F.3d at 348 (noting that “[a] district court‘s determination of whether the government satisfied [the] standard [for the crime-fraud exception] will not be reversed absent a clear showing of abuse of discretion“).
B. Amended Complaint
Appellants also claim that the district court erred in refusing to allow them to amend their complaint for a third time.
Appellants argue that justice required the lower court to allow the amendments, especially where Defendants would have suffered no prejudice. As support for their contention, Appellants cite Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). In Foman, the Supreme Court observed that “[i]f the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits.” Id. at 182, 83 S.Ct. 227. The Court also suggested, however, that leave to amend should be freely given only “[i]n the absence of any apparent or declared reason--such as undue delay, ... repeated failure to cure deficiencies by amendments previously allowed, [and] undue prejudice to the opposing party.” Id.
C. Judgment as a Matter of Law
The Chaudhrys also maintain that the district court erred in denying their motion for judgment as a matter of law and in granting Defendants’ motion for the same.
1. Gallerizzo‘s Alleged Failure to Disclose Amount of Debt in Fair Debt Letter
Appellants allege that Gallerizzo failed to disclose in the December 22nd Demand Letter the precise amount owed by them for legal fees,in violation of
Relying on Black‘s Law Dictionary (6th ed.1990), Appellants urge that while “[p]ayable may ... signify an obligation to pay at a future time, ... when used without qualification, [the] term means that the debt is payable at once.” Appellants thus conclude that attorneys’ fees become a legally enforceable debt as soon as the legal services are rendered, making the district court‘s legal conclusion that they “were not due and payable at the time the notices were sent” erroneous.
We believe, however, that the law of Maryland dictates otherwise. Under state law, loan documents may require that a debtor pay to a creditor the costs incurred by the creditor in collecting a debt, including reasonable attorneys’ fees. See Mortgage Investors of Washington v. Citizens Bank and Trust Co. of Maryland, 29 Md.App. 591, 349 A.2d 647, 650, aff‘d, 278 Md. 505, 366 A.2d 47 (1976). As Appellants suggest, attorneys’ fees due under a promissory note “are payable upon performance of the services contemplated.” Id. at 653. At the time the Demand Letter was sent, however, the legal services had not yet been fully rendered. The fees continued to mount. Furthermore, it was not clear that any legal fees would be owed, since NMC had discretion as to whether to impose legal fees at all and, if so, in what amount. Indeed, when contacted by Gallerizzo to obtain the amount of attorneys’ fees to charge the Chaudhrys, NMC only required the Chaudhrys to pay $8,600, an amount less than the fees actually billed to NMC. Therefore, Gallerizzo, through the Demand Letter, was merely advising the Chaudhrys that they may also be liable to NMC for attorneys’ fees, as was provided in the Construction Loan. Under the circumstances, we find no error in the district court‘s grant of judgment as a matter of law in favor of Appellees.
Appellants allege that Defendants violated
With respect to Count II, the district court determined that Appellants’ counsel, in a telephone conversation with Gallerizzo where he stated that the verification that was needed related to legal fees, “waived whatever claim that the Chaudhrys might make in regard to the alleged failure to verify the inspection fees.” Assuming that there had been no waiver, however, the court determined that “Gallerizzo adequately verified the amount of inspection fees” and “then sent the Chaudhrys’ counsel a letter ... including written verification of these fees.” The court found no duty for Gallerizzo to have assembled supporting documentation.
Contrary to Appellants’ contention, verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt. See Azar v. Hayter, 874 F.Supp. 1314, 1317 (N.D.Fla.), aff‘d, 66 F.3d 342 (11th Cir.1995), cert. denied, 516 U.S. 1048, 116 S.Ct. 712, 133 L.Ed.2d 666 (1996). Consistent with the legislative history, verification is only intended to “eliminate the ... problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid.” S.Rep. No. 95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1699. There is no concomitant obligation to forward copies of bills or other detailed evidence of the debt.
In the present case, Gallerizzo, after receiving assurances from NationsBank that the sums were owed, verified the debt amounts in his January 18th letter to Plaintiffs’ counsel and forwarded a copy of the bank‘s computerized summary of the Chaudhrys’ loan transactions. The summary included a running account of the debt amount, a description of every transaction, and the date on which the transaction occurred. See Graziano v. Harrison, 950 F.2d 107, 113 (3d Cir.1991) (holding that computer printouts which confirmed amounts of debts, the services provided, and the dates on which the debts were incurred constituted sufficient verification). Thereafter, in a January 19th letter to counsel, Gallerizzo restated the amount of the inspection fees and indicated that the amounts were correct. Nothing more is required.
On Count III, the district court held that Gallerizzo was not “required to provide the degree of detail that was contained in the time sheets” and that Defendants’ actions in redacting the legal fees was proper. The court ruled that “Verification only requires a debt collector to confirm with his client that a particular amount is actually being claimed, not to vouch for the validity of the underlying debt.” For the same reasons stated above in support of the court‘s ruling on Count II, we agree with the court‘s determination on Count III.
Moreover, Gallerizzo cannot be liable for having redacted privileged information contained in the bills. Otherwise, a consumer would be able to prevent the legitimate collection of a debt by simply demanding the release of time entries from an attorney, serving as a collector, who has an ethical obligation to protect privileged information. Surely, the FDCPA does not require an attorney to violate that obligation.
In Count IV, Appellants allege that Gallerizzo‘s January 24, 1996 letter responding to a request from Diane Fox, the Chaudhrys’ settlement attorney, was an attempt to collect the debt prior to the verification of the inspection fees or the attorneys’ fees. Because the district court properly held that Gallerizzo verified the inspection fees and legal fees, Count IV must also fail. Even assuming that Gallerizzo failed to verify the fees, however, the court was correct in finding that Gallerizzo‘s letter was not an act to collect debt, but rather was sent to Fox, at her request, so that she could have an accurate payoff figure at a separate meeting to refinance the Chaudhrys’ loan.
3. Gallerizzo‘s Alleged Failure to Mail Verification of Debt Directly to Chaudhrys
The FDCPA mandates that when a consumer disputes a debt in writing, “the debt collector obtains verification of the debt and a copy of such verification is mailed to the consumer by the debt collector.”
Appellants, however, disregard
4. Jury Verdict that Gallerizzo Knowingly Attempted to Collect Legal Fees in Excess of Amount Properly Chargeable to Plaintiffs
Appellants maintain that the jury verdict that Gallerizzo knowingly and intentionally attempted to collect legal fees in excess of the amount properly chargeable to them, in violation of
Appellants further insist that the jury‘s verdict is supported by references in the redacted Research Memorandum to an increase in a “consumer credit line” from NationsBank. The references, Appellants argue, demonstrate that Defendants were researching issues pertaining to Appellants’ Private Home Equity Line of Credit, a consumer credit line with NationsBank unrelated to the Chaudhrys’ debt under the Construction Loan that Gallerizzo was attempting to collect. To the contrary, Gallerizzo testified that the Chaudhrys’ request for additional funding to finish construction of the Inglewood Home was reviewed under both the Home Equity Line and the Construction Loan. The use of the term “consumer credit line” related to the request for funds for the construction of the home and not solely to the Home Equity Line. Thus, the research was chargeable under the Construction Loan. As the trial court noted, Plaintiffs offered no evidence to rebut Gallerizzo‘s testimony. There was, therefore, no basis for the jury to find that the request to increase the consumer credit line was not related to the construction of the home. We find no error with the district court‘s grant of judgment as a matter of law in favor of Defendants.
The Chaudhrys allege that Gallerizzo violated
Appellants first charge that the district court improperly instructed the jury. In determining whether a debt collectors’ act or communication constitutes a false, deceptive, or misleading practice under the FDCPA, Appellants urge that a court must assess the impact that the act or communication would have on the least sophisticated debtor. See United States v. National Financial Services, Inc., 98 F.3d 131, 135-36 (4th Cir.1996) (applying “least sophisticated debtor” standard to alleged violation of
When I refer to a person unsophisticated in matters of law or finance, I am referring to a person of reasonable intelligence who has a basic understanding and has a willingness to listen to what is being said with care. I am not referring to a person who places an unrealistic or irrational interpretation upon what was said.
Appellants insist that the language does not comport with the “least sophisticated debtor” standard.
We review challenges to jury instructions for abuse of discretion. See Nelson v. Green Ford, Inc., 788 F.2d 205, 208-09 (4th Cir.1986). The test of the adequacy of jury instructions is whether the jury charge, construed as a whole, adequately states the controlling legal principle without misleading or confusing the jury. See Spell v. McDaniel, 824 F.2d 1380, 1395 (4th Cir.1987). With this in mind, we believe that the court‘s instruction is consistent with the “least sophisticated debtor” doctrine which seeks to protect naive consumers, while “preserving a quotient of reasonableness and presuming a basic level of understanding.” National Financial Services, 98 F.3d at 136. We are satisfied that the district court‘s instruction adequately informed the jury of the essential principles of the doctrine. We find no abuse of discretion.
Appellants also allege that, at the December 21st meeting, Gallerizzo refused to provide them with information about the interest arrearage, which if paid arguably would have prevented their default on the loan. Appellants maintain that Gallerizzo instructed them to put their request for the information in writing and that the bank would take no action until after responding to their proposal. Appellants insist that Gallerizzo never intended to provide the requested amount of interest arrearage. Rather, they argue, he acted solely to deceive them into delaying making the required interest payment so that he could accelerate the Construction Loan the following day.
Appellants’ attorney tape-recorded the December 21st meeting, and, contrary to Appellants’ assertions, the transcript of the recording contains no evidence of false or misleading representations by Gallerizzo. Throughout the meeting, Gallerizzo advised Appellants that he had no authority to bind the bank. He also stated that there could be no agreement unless the Chaudhrys provided a release of the alleged claims that they were making against the bank, which they refused to do. Given the content of the recording and the fact that the Chaudhrys had no right under the Construction Loan to cure the default simply by paying the interest arrearage, there is clearly sufficient evidence for the jury to conclude that Defendants did not violate
Appellants finally argue that the district court improperly refused to permit the Chaudhrys to use the unredacted version of the January 4, 1997 letter written by Appellants’ counsel. Appellants contend the court‘s refusal contributed substantially to the jury‘s verdict. The January 4th letter contains numerous allegations against NationsBank not at issue in the instant case, but the subject of a separate state action. The state allegations are not only of questionable relevance but also may have unfairly prejudiced Defendants. The district court‘s decision to disallow an unredacted version of the letter is well within the discretion afforded the district court with respect to evidentiary matters.10 See Martin v. Deiriggi, 985 F.2d 129, 137 (4th Cir.1993) (noting that decisions regarding the admission and exclusion of evidence are within the discretion of the trial court and should not be reversed on appeal absent an abuse of discretion).
Appellants allege a violation of
D. Sanctions
The district court, citing Count VII,11 granted sanctions against Plaintiffs pursuant to
In Cooter & Gell v. Hartmarx Corp., the Supreme Court noted that “Rule 11 imposes a duty on attorneys to certify that they have conducted a reasonable inquiry and have determined that any papers filed with the court are well grounded in fact, legally tenable, and ‘not interposed for any improper purpose.’ ” Id. at 393, 110 S.Ct. 2447. “A complaint containing allegations unsupported by any information obtained prior to filing, or allegations based on information which minimal factual inquiry would disprove, will subject the author to sanctions.”14 In re Kunstler, 914 F.2d 505, 516 (4th Cir.1990), cert. denied, 499 U.S. 969, 111 S.Ct. 1607, 113 L.Ed.2d 669 (1991). Similarly, section 1692k(a)(3) allows the court, upon a finding that an action “was brought in bad faith and for the purpose of harassment,” to award to the defendant reasonable attorney‘s fees.
For the foregoing reasons, we affirm the district court‘s ruling in totum.
AFFIRMED.
Notes
(a) Notice of debt; contents
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing--
(1) the amount of the debt; * * *
[I]f the consumer notifies the debt collector in writing within [30 days of the initial notice] that the debt, or any portion thereof, is disputed, ... the debt collector shall cease collection of the debt, or any disputed portion thereof, until verification is mailed to the consumer.
(b) Representations to Court. By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person‘s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances,--
(1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation;
(2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;
(3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonable based on a lack of information or belief.
(c) Sanctions. If, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) has been violated, the court may, subject to the conditions stated below, impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation.