Ingram v. Glast, Phillips & Murray ( 2006 )

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT July 6, 2006
Charles R. Fulbruge III
No. 05-10665 Clerk
Summary Calendar
GEORGE INGRAM III, et al.,
Plaintiffs,
TIMOTHY W. SORENSON; JEFF FORREST SMITH,
Appellants,
v.
GLAST, PHILLIPS & MURRAY, A Professional Corporation; BUTLER
& BINION LLP, DEMPSEY PRAPPAS; STEVEN CLAUSEN; FRED TUTHILL;
LOUIS B. PAINE; RICHARD AVERY, Individually and as
liquidating partner of Butler & Binion LLP,
Defendants – Appellees.
Appeal from the United States District Court
for the Northern District of Texas
No. 04-cv-2129
Before HIGGINBOTHAM, BENAVIDES, and DENNIS, Circuit Judges.
PER CURIAM:*
This saga began in 1997 when George Ingram III, who is not a
party to this appeal, retained the law firm of Appellee Butler &
Binion LLP. By June of 1998, the firm discontinued legal services
because of nonpayment. To collect the unpaid fees, the firm
initiated arbitration, pursuant to an agreement between it and
* Pursuant to 5TH CIR. R. 47.5, this Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
Ingram. Before arbitration began, Ingram filed a legal malpractice
suit in state court against the firm and various attorneys who had
worked on his matters. The state court stayed the suit and
compelled arbitration. The dispute then was arbitrated over the
course of several years. According to Appellants, the arbitration
proceeding was dismissed in 2004. Several months thereafter,
Ingram filed a suit in federal court against Appellees. Ingram
retained Appellants Jeff Smith and Timothy Sorenson to represent
him in this suit. On the eve of scheduled depositions and
discovery deadlines, Ingram voluntarily dismissed his claims
against Appellees.
Following dismissal, Appellees filed a motion for sanctions,
seeking recovery of their costs, fees, and expenses, totaling
approximately $200,000. The district court ordered an evidentiary
hearing on the motion and ordered the parties to file and exchange
exhibit and witness lists prior to the hearing. Appellants did not
do so, but the court still permitted argument by Appellants.
Pursuant to 28 U.S.C. § 1927 (2000) and the court’s inherent
powers, the district court imposed sanctions of attorneys’ fees,
costs, and expenses against Ingram’s attorneys,, in the amount of
$184,360.93. Smith and Sorenson, the Appellants, challenge the
imposition of sanctions.
A district court’s sanction order, premised on 28 U.S.C.
§ 1927 and its inherent powers to impose sanctions, is reviewed for
2
abuse of discretion. Tollett v. City of Kemah, 285 F.3d 357, 363
(5th Cir. 2002). A court abuses its discretion to impose sanctions
when a ruling is based on an erroneous view of the law or on a
clearly erroneous assessment of the evidence. Matta v. May, 118
F.3d 410, 413 (5th Cir. 1997).
Appellants attempt to attack the award of sanctions for lack
of due process. “The fundamental requirement of due process is the
opportunity to be heard at a meaningful time and in a meaningful
manner.” Mathews v. Eldridge, 424 U.S. 319, 333 (1976) (internal
quotation marks omitted). Here, the court gave Appellants notice
of the evidentiary hearing and permitted each side one hour to
present proof, even allowing Appellants to present testimony though
they failed to produce witness or exhibit lists as was ordered by
the court. The court not only afforded Appellants due process but
also arguably went beyond what is required. See Merriman v. Sec.
Ins., 100 F.3d 1187, 1192 (5th Cir. 1996) (affirming the award of
sanctions despite the fact that the district court did not conduct
an evidentiary hearing because “due process does not demand an
actual hearing”). Therefore, the court’s imposition of sanctions
was not in violation of due process.
Turning to the substance of the hearing, the district court
provided lengthy and detailed reasons for imposing sanctions. For
example, the evidence demonstrated that Ingram falsely reported a
large amount of personal wealth to Butler & Binion LLP and that
3
Smith and Sorenson pursued the post-arbitration litigation knowing
that it was a “complete sham.” Specifically, the court found that
(1) Appellees had established bad faith conduct, improper motive,
and reckless disregard of the duty owed to the court; (2) the
“proceedings were multiplied both unreasonably and vexatiously;”
(3) the case had “absolutely no basis;” and (4) “the entire case
[was] meritless and frivolous.”
The district court articulated sufficient reasons for imposing
sanctions. Section 1927 provides that “any attorney . . . who so
multiplies the proceedings in any case unreasonably and vexatiously
may be required by the court to satisfy personally the excess
costs, expenses, and attorneys’ fees reasonably incurred because of
such conduct.” 28 U.S.C. § 1927 (2000). This Court has
interpreted the provision as requiring evidence of bad faith,
improper motive, or reckless disregard of the duty owed to the
court. Edwards v. Gen. Motors Corp., 153 F.3d 242, 246 (5th Cir.
1998). The court correctly found evidence of all three. The
court’s findings also support the imposition of sanctions pursuant
to its inherent power. Batson v. Neal Spelce Assoc., 805 F.2d 546,
550 (5th Cir. 1986) (“[F]ederal courts possess inherent power to
assess attorney’s fees and litigation costs when the losing party
has acted in bad faith, vexatiously, wantonly or for oppressive
reasons.”) (internal quotation marks omitted).
AFFIRMED.
4