State Ex Rel. Tal v. City of Oklahoma CityState Ex Rel. Tal v. City of Oklahoma City
- Reporters:
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- Before:
- James F. Davis of Andrews Davis Legg Bixler Milsten & Price
Lead Opinion
¶ 1 These two appeals come from the same trial court case and require resolution of two questions.1 (1) Did the trial judge err in denying a motion for sanctions filed pursuant to
¶ 2 The appellate review standard of a sanction ruling is abuse of discretion. Hammonds v. Osteopathic Hospital Founders Association, 1996 OK 100, 934 P.2d 319, 322 (propriety of sanctions under
¶ 3 To reverse for abuse of discretion we must determine the trial judge made a clearly erroneous conclusion and judgment, against reason and evidence. Abel v. Tisdale, 1980 OK 161, 619 P.2d 608, 612. Also, proceedings to impose sanctions are considered equitable in nature. Warner v. Hill-crest Medical Center, supra, 914 P.2d at 1072. Though an appellate court examines and weighs any proof in the record, it abides the presumption the lower court decision on the sanction question is legally correct and cannot be disturbed unless contrary to the weight of the evidence or to a governing principle of law. Id. If legally correct the trial judge’s decision may not be reversed because of faulty reasoning, an erroneous finding of fact, or the consideration of an immaterial issue. Id.
PART II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY.
¶ 4 Title
¶ 5 In January 1999 T.A.R. submitted a written demand to City under
¶ 6 In response to the demand City filed a declaratory judgment suit against OCURA and two of the private-sector defendants. The suit covered three agreements dealt with in the written demand — a Parking Agreement, a Ground Lease and a Redevelopment Agreement (the Agreements). In the suit City asked the lower court to declare the Agreements lawful and, alternatively, if determined unlawful that an order issue that OCURA return certain property to City and that all amounts owed City be returned as well. City did not raise any issue(s) concerning part of the written demand — Claim III thereof — that challenged the lawfulness of City’s decision to construct a new power plant to serve the renovated Myriad Convention Center and a new sports/events Arena built near it. Nor did City raise issues cov
¶ 7 Represented by other counsel than Ms. LeBoeuf, T.A.R. sought to intervene in the declaratory action, claiming, in effect, City was not diligently prosecuting the suit because City’s position was the Agreements were lawful (the position taken by all named parties). Intervention was denied and, thereafter, trial was had without T.A.R.’s participation, although the depositions of, at least, some of T.A.R.’s members were taken about a week before trial and were considered by the trial court before ruling on the motion to intervene. Tal I, 1999 OK 71, at ¶ 5, 988 P.2d at 904. After trial a judgment ruling the Agreements lawful issued and a mandatory injunction was entered requiring OCURA to carry out the terms of the Agreements between itself and the private-sector defendants. Tal I, 1999 OK 71, at ¶ 7, 988 P.2d at 904. The judgment held the public property covered by the Agreement(s) had been sold for adequate consideration and that the Agreements provided adequate accountability and safeguards to OCURA and City. Tal I, 1999 OK 71, at ¶¶ 11-12, 988 P.2d at 905.
¶ 8 T.A.R. appealed the denial of intervention and Tal I affirmed because City was representing the rights of all its taxpayers, City was entitled to the presumption it would do so in good faith and taxpayers failed to overcome the presumption City would act in good faith in presenting the matter of the Agreements’ lawfulness to the trial court. Tal I, 1999 OK 71, at ¶ 31, 988 P.2d at 908. Tal I also opined that the fact all parties to the declaratory suit agreed the Agreements were lawful did not deprive the action of its justiciable character, nor were the issues presented in it feigned or collusive. 1999 OK 71, ‘at ¶ 29, 988 P.2d at 907. We also note neither in the trial court (in its written submissions — motion to intervene and motion for continuance and brief of authorities in support of motion to intervene) nor in its appellate brief submitted in Tal I to support reversal of the denial of intervention did T.A.R. assert-City’s failure to raise any issue concerning the power-plant allegations of the written demand or, except in a cryptic manner, City’s failure to assert in the declaratory suit the claims of self-dealing and conflict of interest of certain public officials.
¶ 9 Also, in Tal I it was expressly stated that only the narrow issue of whether the trial court erred in denying taxpayers’ motion to intervene (and a related motion for a continuance) was before this Court. Tal I, 1999 OK 71, at ¶ 14, 988 P.2d at 905. Tal I also, in effect, ruled, that because taxpayers were properly denied intervention they were excluded as party litigants and had no standing to tender for our review in that appeal any errors that may have been made in the judgment upholding the Agreements as lawful. Tal I; 1999 OK 71, at ¶ 23, 988 P.2d at 906. Thus, although Tal I discussed the Agreements, it did not affirm the trial court judgment declaring their lawfulness [Tal I, 1999 OK 71, at ¶ 0 and ¶ 31, 988 P.2d at 902 and 908] because no party actually appealed the trial court’s merit judgment. Only T.A.R. sought to appeal from it, but because intervention wa‘s denied we ruled they lacked standing to tender any errors made in regard thereto.
■ ¶ 10 Another previous case involving T.A.R. has also been before this Court, State ex rel. Tal v. Norick {Tal II), 1999 OK 85, 991 P.2d 999. Prior to the January 1999 written demand, T.A.R. had submitted an earlier written demand (September 1998) to City concerning transactions other than those involved in Tal I, to wit: the Bricktown Ballpark contract(s). Tal II, 1999 OK 85, at ¶ 4, 991 P.2d at 1000. T.A.R. filed a qui tam action in relation to the Ballpark eontract(s) against City and the Oklahoma City Public Property Authority (OCPPA). Id. However, City and OCPPA responded to the September 1998 demand with a declaratory suit asking the lower court to declare the Ballpark -transaction(s) valid or, alternatively, if determined unlawful, sought return of the property. Tal II, 1999 OK 85, at ¶ 5, 991 P.2d at 1000. In Tal II we affirmed a trial court decision dismissing the Ballpark qui tam action on the basis it was brought prematurely because City and OCPPA were
¶ 11 In March 2000, after Tal I and II, T.A.R. brought the qui tam suit underlying the present appeals. The trial court’s dismissal of the suit was affirmed in State ex rel. Tal v. City of Oklahoma (Tal III), 2000 OK 70,19 P.3d 268, cert, denied 534 U.S. 814, 122 S.Ct. 40, 151 L.Ed.2d 13 (2001) on the basis Tal I’s holding that T.A.R. did not have standing to intervene in City’s prior declaratory suit because of the failure to show City was not adequately representing their interests or those of the other taxpayers of Oklahoma City, in the declaratory suit, precluded the qui tam action regarding the same projects). Although Tal III did not specify the preclusion doctrine applied, the parties here seem to agree it was claim (res judicata) and/or issue (collateral estoppel) preclusion.4
¶ 12 The Hogan group’s
¶ 13 Ms. LeBoeuf and plaintiffs argue (as in the trial court) that the qui tam action was not brought for any improper purpose and that a reasonable argument existed that it was not precluded. They assert that Ms. LeBoeuf, after conducting extensive factual investigation into the qui tam written demand claims and significant legal research into whether preclusion doctrine barred the suit, concluded a competent attorney could make a reasonable argument the action was not precluded. She so advised her clients and the action was filed.
¶ 14 Ms. LeBoeuf also prepared on plaintiffs’ behalf and filed in the trial court extensive submission(s) setting forth the position as to why the suit was not barred. Part of the argument was and is that Tal I can be read to be limited only to the intervention question and it did not absolutely foreclose an argument that City did not actually diligently prosecute the claims made in the written demand through the vehicle of the declaratory suit. ’ She argued that because City
¶ 16 The Hogan group appeals the
PART III. CASE NO. 95,271 — APPEAL BY HOGAN GROUP — THE TRIAL JUDGE DID NOT ABUSE HIS DISCRETION IN DENYING THE
¶ 16 Oklahoma follows the American Rule as to the recovery of attorney fees. The Rule is generally that each litigant pays for their own legal representation and our courts are without authority to assess attorney fees in the absence of a specific statute or contract allowing for their recovery. Kay v. Venezuelan Sun Oil Co., 1991 OK 16, 806 P.2d 648, 650. Exceptions to the Rule are narrowly defined [id] and carved out with great caution [Beard v. Richards, 1991 OK 117, 820 P.2d 812, 816] because it is understood liberality of attorney fee awards against the non-prevailing party has a chilling effect on our open access to courts guarantee.
¶ 17
A. SIGNATURE. Every pleading, written, motion, and other paper shall be signed by at least one attorney of record in his individual name, ... or, if the party is not represented by an attorney, shall be signed by the party....
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 haveevidentiary 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 reasonably based on a lack of information or belief.
C. SANCTIONS. If, after notice and a reasonable opportunity to respond, the court determines that subsection B of this section has been violated, the court shall, subject to the conditions stated below, impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subsection B of this section or are responsible for the violation.
1. HOW INITIATED.
a. By Motion. A motion for sanctions under this rule shall be made separately from other motions or requests and shall describe the specific conduct alleged to violate subsection B of this section. It shall be served as provided in Section 2005 of this title, but shall not be filed with or presented to the court unless, within twenty-one (21) days after service of the motion or such other period as the court may prescribe, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected. If warranted, the court may award to the party prevailing on the motion the reasonable expenses and attorneys fees incurred in presenting or opposing the motion....
2. NATURE OF SANCTIONS; LIMITATIONS. A sanction imposed for violation of this rule shall be limited to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated. Subject to the limitations in subparagraphs a and b of this paragraph, the sanction may consist of, or include, directives of a nonmonetary nature, an order to pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of some or all of the reasonable attorneys fees and other expenses incurred as a direct result of the violation.
a. Monetary sanctions shall not be awarded against a represented party for a violation of paragraph 2 of subsection B of this section.
Like its federal counterpart
¶ 18 The propriety of sanctions under
¶ 19 Although the argument(s) put forward by Ms. LeBoeuf in response to the dismissal motions of the underlying qui tam suit were unsuccessful as evidenced by our affirming dismissal on preclusion grounds in Tal III, the question is whether her arguments as to why the qui tam suit was not precluded were nonetheless objectively reasonable, rather than being baseless, or factually or legally frivolous. We believe as a matter of law the arguments were not objectively unreasonable, nor were they shown to be baseless, or factually or legally frivolous.8
¶ 20 The central elements of claim and issue preclusion are well known. Deloney v. Downey, 1997 OK 102, ¶ 17, 944 P.2d 312, 318. Claim preclusion bars relit-igation by parties or their privies of issues which either were or could have been litigated in a prior action which resulted in a prior judgment on the merits. Id. In other words, where the two causes of action are the same the .first judgment is a complete bar to the second action. McKee v. Producers’ & Refiners’ Corp., 1935 OK 160, 41 P.2d 466, 469. Issue preclusion requires, at a minimum, that the party against whom it is being asserted was either a party to or a privy of a party to the prior action and that the issue subject to preclusion have actually been adjudicated in the prior case in which said issue was necessary or essential to its outcome [Deloney, 1997 OK 102, at ¶ 17, 944 P.2d at 318], but the doctrine does not require the successive causes of action to be the same. McKee, 41 P.2d at 469. For either to be properly applied the party against whom it is interposed, or someone in privity with such party, must have had a full and fair opportunity to litigate the claim or critical issue. Richards v. Jefferson County, Alabama, 517 U.S. 793, 116 S.Ct. 1761, 135 L.Ed.2d 76 (1996); Nealis v. Baird, 1999 OK 98, ¶ 51, 996 P.2d 438, 458. In essence, plaintiffs argued — in response to the motions filed by defendants to dismiss the underlying qui tam action on preclusion grounds — that City could not be said to be in privity with taxpayers as to the claims of unlawfulness raised in the written demand because City’s position was directly at odds with taxpayers’ position, City did not adequately represent the interests of Oklahoma City taxpayers generally in the prior declaratory suit, and that they (taxpayers) never had a full and fair opportunity to present the claims raised in the written demand or the adequacy of City’s prosecution of the declaratory suit sufficient to invoke a preclusion bar.
¶21 Although normally a prior action by a public governmental entity in a qui tam-like situation does support application of the doctrine of preclusion as to all claims that were raised or could have been raised in the
¶ 22 This Court has also ruled that the right of a taxpayer to institute and maintain a qui tam action does not accrue until the proper officers fail or refuse to institute and prosecute the action, and if such officers do institute and diligently prosecute a proper action, the right of the taxpayer to institute and prosecute the qui tam suit never even accrues. State ex rel. Watson v. Board of Com’rs of Lincoln County, 1943 OK 56, 137 P.2d 240 Syllabus by the Court. However, our eases also seem to make plain that a halfhearted effort on the part of public officials in pursuit of an action following a qui tam written demand does not suffice to cut off the taxpayer right to pursue an action in their own right. See State ex rel. Sheet v. Ingram, 1933 OK 373, 23 P.2d 648, overruled in part on other grounds in State Board of County Com’rs of Pontotoc County ex rel. Braly v. Ford, 1941 OK 270, 116 P.2d 988; see also Threadgill v. Peterson, 1923 OK 662, 219 P. 389 and Wood v. Phillips, 1923 OK 668, 219 P. 646 (taxpayers of municipal subdivision or county should be allowed to intervene in suit brought against public entity on alleged contractual claim so that suit may be properly defended when the governmental entity fails to mount an appropriate defense and essentially agrees said claim should be paid).
¶23 The issue Tal I decided was that taxpayers were properly denied intervention in City’s declaratory judgment suit because they failed to overcome the presumption City was prosecuting that suit in good faith to test the legality of the challenged Agreements. Although, in essence, Tal I stated that the fact all parties to the declaratory suit agreed on the lawfulness of the Agreements did not show the suit was collusive or fictitious, there can be no serious question City’s declaratory suit was a friendly one because all parties to it disagreed with the claims made in the written demand and argued the lawfulness of the Agreements presented in that case. Because of the need to resolve speedily an issue of public importance, there can also be little question that Tal I relaxed the strict necessity of a true or a high level of adverseness normally required for there to be a justicia-ble live case or controversy sufficient to invoke a court’s authority to hear a dispute. Tal I, supra, 1999 OK 71, at ¶¶ 25-30, 988 P.2d at 907-908; see Application of Goodwin, 1979 OK 106, 597 P.2d 762. There also seems to be no question that City did not raise in the declaratory suit all the claims made in the written demand to support the unlawfulness of the Agreements or the claims made as to the invalidity of the power plant transaction(s).
¶ 24 In Richards v. Jefferson County, Alabama; supra, the United States Supreme Court found it necessary to distinguish between two types of taxpayer actions to decide a preclusion issue involving prior litigation.
¶ 25 The situation involved here, of course, is the former type, i.e. a qui tam action, and it was correct to apply the preclusion bar in regard to further litigation of this matter because plaintiffs should have raised all of their claimed deficiencies regarding City’s prior declaratory judgment suit in that proceeding’ — notwithstanding their technical non-party status in the prior action — either at the trial level or in their appeal of the denial of intervention in that ease. Nevertheless, we conclude the position put forward in the trial court by Ms. LeBoeuf as to why the instant qui tam suit was not wholly precluded did not fall below the objective standard of
PART IV. CASE NO. 95,741 — APPEAL BY PLAINTIFFS — THE TRIAL JUDGE ABUSED HIS DISCRETION IN GRANTING ATTORNEY FEES UNDER HIS INHERENT AUTHORITY.
¶ 26 City National Bank & Trust Co. v. Owens, 1977 OK 86, 565 P.2d 4, recognized the inherent equitable authority of a trial court to award attorney fees against a party for bad faith litigation misconduct— conduct that is vexatious, wanton or engaged in for oppressive reasons. The authority springs from a court’s power to manage its own affairs to achieve the orderly and timely disposition of cases and is a necessary implicit element in the existence of a judicial system. See Winters By and Through Winters v. City of Oklahoma City, 1987 OK 63, 740 P.2d 724, 726. Owens’ progeny makes plain, however, the inherent authority exception to the American Rule recognized in Owens (1) is a narrow one; (2) should be applied with a degree of caution and restraint; and (3) was not intended to grant trial courts some broad, all-encompassing equitable authority to award attorney fees. Smith v. State ex rel. Dept, of Human Services, 1990 OK 19, 788 P.2d 959, 961-962; see also Wallace v. Halliburton Co., 1993 OK 24, 850 P.2d 1056, 1060-1061. In plain words, the inherent power was not meant to be a mechanism to sanction or punish parties or their attorneys for raising novel theories or espousing unpopular causes that are neither baseless nor frivolous. For attorney fees to be awarded under a court’s inherent authority “overriding considerations” must indicate the need for such a recovery. Owens, 565 P.2d at 8-9. Our review of the record convinces us the
¶ 27 In Chambers v. NASCO, Inc., 501 U.S. 32, 46-47, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991), reh. denied 501 U.S. 1269, 112 S.Ct. 12, 115 L.Ed.2d 1097 (1991) the United States Supreme Court recognized that the inherent power of a court to impose sanctions is both broader and narrower than
¶ 28 In our view, because it was not objectively unreasonable for Ms. LeBoeuf to make the legal argument — based on her factual investigation, review of applicable law, including this Court’s opinions in Tal I and Tal II — that the underlying qui tarn suit was not precluded, the plaintiffs (the clients) may not be sanctioned simply for following that legal advice in the form of having the suit filed and having Ms. LeBoeuf respond to the motion(s) to dismiss that were based on preclusion grounds. But our review of the record convinces us that is what occurred.
¶ 29 Generally, it is inappropriate to sanction the client for following their lawyer’s legal advice. See e.g. Patterson v. Alaska Airlines, Inc., 756 F.Supp. 476, 480 (W.D.Wash.1990)(it is attorney’s responsibility to determine whether statute of limitation has run, not the client’s responsibility, for purposes of determining which of them— attorney, client, or both — is subject to sanctions under
¶ 30 Á review of the record in these appeals leads us to conclude the plaintiffs were not sanctioned for any actual litigation misconduct or culpable conduct of their own, such as providing their attorney with incorrect facts, or some similar conduct that would involve the clients’ own bad faith litigation misconduct. Such latter conduct, i.e. providing the attorney with false factual information or failing to provide obviously pertinent information to their counsel would, of course, permit sanctions solely against the client. See Taylor v. United States, supra. That is not the situation here, however. The conduct sanctioned, as we see it, was for having the lawsuit filed and for mounting a response to the motions to dismiss. The clients cannot be sanctioned for said conduct when the trial court was of the view it was not appropriate to sanction plaintiffs’ counsel (which we agree was an appropriate decision or, at least, not an abuse of the trial judge’s discretion) under
¶ 31 Given the legal advice relied upon it would also be inappropriate to conclude T.A.R. filed suit merely for the improper purpose of delaying the development of certain Bricktown projects because Mr. Tal was an unsuccessful bidder on some Bricktown projects. It is simply not unusual for an unsuccessful bidder on a public project to bring a qui tam-like proceeding questioning the legality or validity of a contract or transaction that has actually been awarded. See e.g. Ferch v. District Court of City and
¶ 32 In that it was not objectively unreasonable to have filed the qui tam suit and to have mounted a response to defendants’ motions to dismiss based on preclusion, and because the record does not support a conclusion there was some overriding need for a monetary attorney fee sanction, the trial judge abused his discretion in using his inherent power against plaintiffs as he did. As a matter of law that authority was applied too broadly, inconsistently with City National Bank & Trust Co. v. Owens, supra and progeny, and the trial judge’s use of his inherent authority, in the circumstances evident here, was irreconcilably at odds with the
PARTV. CONCLUSION.
¶ 33 The trial judge did not err in denying the Hogan group motion for sanctions made pursuant to
¶ 34 Accordingly, the trial court judgment appealed in Case No. 95,271 is AFFIRMED and the trial court judgment appealed in Case No. 95,741 is REVERSED.
¶ 35 HARGRAVE, C.J., HODGES, KAUGER, SUMMERS and BOUDREAU, JJ., concur. ¶ 36 OPALA, J., concurs in parts I through III; concurs in result in part IV. ¶ 37 WATT, V.C.J. and WINCHESTER, J., dissent.Notes
. We sua sponte consolidate the two appeals for opinion. Consolidation promotes a coherent body of law because the appeals emanate from the same trial court case, and one appeal involves denial of sanctions against represented parties and their attorney under
. Attorneys appeared for plaintiffs and filed briefs on their behalf in Appeal Case No. 95,741 other than MaryGaye LeBoeuf, who represents plaintiffs and herself in Appeal Case No. 95,271.
. A question concerning whether all the private-sector defendants that had their motion for
. The Hogan group also seems to assert the law of the case doctrine. Even if that doctrine is applicable, in our view, the arguments raised by plaintiffs and Ms. LeBoeuf as to why .the underlying qui tam action was not wholly barred/precluded, although unsuccessful, did not fall below the objective reasonableness standard of a competent attorney sufficient to support a sanction award against plaintiffs or Ms. LeBoeuf.
. The City of Oklahoma City and related defendants (City) and the Oklahoma City Urban Renewal Authority and related defendants (OCURA) also moved for sanctions against plaintiffs and ’ Ms. LeBoeuf under
.Title
. As indicated in the text, City of Oklahoma City v. Oklahoma City Urban Renewal Authority (Tal I), 1999 OK 71, ¶ 4, 988 P.2d 901, 904 states City’s declaratory suit was filed on January 16, 1999. However, attached to plaintiffs (sic) brief in opposition to defendants’ motions to dismiss filed on April 20, 2000 in the underlying qui tarn suit involved in these appeals is a copy of City‘s petition in the declaratory suit showing a file-stamp date of January 26, 1999.
. We note we do not find State ex rel. Oklahoma Bar Ass’n v. Tweedy, 2000 OK 37, 52 P.3d 1003, cert, denied 531 U.S. 1145, 121 S.Ct. 1082, 148 L.Ed.2d 958 (2001), to be controlling on the sanction issue(s) involved in this case. We also do not believe, as explained in PART IV; infra, at ¶31, that an appropriate conclusion could be reached that the underlying qui tam suit was filed for the purported improper purposes of delay or monetary gain such that sanctions under
. In view of our reversal of the attorney fee judgment appealed by plaintiffs in Appeal Case No. 95,741 we need decide no issue raised by them in said appeal concerning the reasonableness of the amount of fees awarded.
Dissenting Opinion
with whom WINCHESTER, J. joins, dissenting:
DISSENTING OPINION
¶ 1 I dissent to the majority opinion. I would reverse the trial court for having declined to impose sanctions under