Huff, Virginia D. v. Dobbins Fraker

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-1890
VIRGINIA D. HUFF,
Plaintiff-Appellant,
and
DEENA H. WHEELER,
Appellant,
v.
DOBBINS, FRAKER, TENNANT, JOY
& PERLSTEIN, a professional corporation,
and CHERYL A. HANDY,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of Illinois.
Case No. 96-CV-1014--Michael M. Mihm, Judge.
Argued November 2, 2000--Decided March 23, 2001
Before HARLINGTON WOOD, JR., RIPPLE, and ROVNER,
Circuit Judges.
HARLINGTON WOOD, JR., Circuit Judge. The court has
seen this case previously but unfortunately it is
back. The litigation between these parties began
in May 1994 in state court in Illinois when Carle
Clinic Association ("Clinic"), a professional
corporation of Champaign County, Illinois, filed
suit against Virginia D. Huff, a widow, for
payment for medical services alleged to be owing
by her to the Clinic in the approximate amount of
$37,000, plus attorney’s fees and costs. The
Clinic was represented by the law firm of
Dobbins, Fraker, Tennant, Joy & Perlstein, P.C.
of Champaign, Illinois ("the Dobbins firm"). Huff
was initially contacted by the Dobbins firm by a
letter dated March 24, 1994, in which the firm
demanded payment within twenty-one days of the
entire amount claimed to be outstanding. Upon
receipt of this letter, Huff contacted her
daughter, Attorney Deena Wheeler,/1 to represent
her. At that time, Wheeler was serving as in-
house counsel for State Farm Insurance Company of
Bloomington, Illinois. The Dobbins firm filed
suit, and in December 1995, the Illinois Circuit
Court entered judgment against Huff for the
underlying debt and about $11,000 in prejudgment
interest, but did not allow attorney’s fees. The
judgment of the Illinois Circuit Court was
affirmed by the Illinois Appellate Court in 1997.
While the state case was proceeding, Huff, in
May 1995, filed this suit in the United States
District Court for the Central District of
Illinois against the Dobbins firm and Attorney
Cheryl A. Handy, alleging violations of the Fair
Debt Collection Practices Act, 15 U.S.C. sec.
1692 et seq. ("FDCPA"). The complaint alleged
that the demand letter from the firm which was
signed by Attorney Handy "falsely represented the
amount of the alleged debt." Huff further alleged
that, in the state court action, the firm
"falsely" claimed a right to attorney’s fees./2
Huff filed her first amended complaint in
November 1995, alleging that the Dobbins firm and
Attorney Handy violated the validation
requirements of 15 U.S.C. sec. 1692g by failing
to give proper written notice of the debt. The
first amended complaint also alleged violations
of 15 U.S.C. sec. 1692e, sec. 1692f, and other
unspecified subsections of sec. 1692. Huff
followed with a second amended complaint in March
1996 which repeated the counts found in the first
amended complaint and added another claim based
on an alleged violation of the FDCPA resulting
from the Dobbins firm and Attorney Handy
contacting Huff directly instead of through her
attorney. On cross-motions for summary judgment,
the district court ruled in September 1996 in
favor of the defendants on all of the issues,
except whether the demand letter had complied
with the validation requirement of the FDCPA set
out in sec. 1692g. That demand letter, the court
held, failed to satisfy the provisions of sec.
1692g(a), which requires that a debtor be advised
that he can dispute the debt and that, if the
debt is disputed, the debt collector will verify
the debt and provide the debtor with a copy of
this verification. The district court found that
the Dobbins firm had failed to supply that
information and had also defaulted on another
requirement set out in sec. 1692g(a)(5).
In October 1996, Wheeler filed a vague motion
for a partial rehearing which the district court
denied in June 1997./3 Wheeler next sought leave
to file a third amended complaint alleging yet
another violation of the FDCPA, this time under
sec. 1692g(b). The district court denied this
request as "too late." Defendants sought
sanctions, which were denied. During this phase
of the proceedings, Wheeler, attempting to
establish class liability under sec. 1692k of the
FDCPA, moved for additional discovery seeking,
among other things, information on every person
or entity from which the Dobbins firm had
attempted to collect debts within a certain
period. In March 1998, the district court denied
Wheeler’s discovery motion and at the same time
limited actual damages for the firm’s violation
of the FDCPA to the period between the receipt of
the law firm’s demand letter and the time Huff
was represented by counsel. Another motion by
Huff to amend the pleadings was denied, as was
the Dobbins firm’s renewed motion for sanctions.
After all this in-court activity, only some of
which is recounted above, the district court
issued a firm warning to Wheeler that further
efforts to relitigate and pursue matters
previously decided would lead to sanctions.
In a few days, however, Wheeler filed a second
motion for summary judgment which was stricken as
redundant in April 1998. When Wheeler filed a
cross-motion to reconsider that latest order, the
district court viewed it as an attempt to
relitigate settled issues contrary to the court’s
earlier warning, and, therefore, allowed
defendants’ motion for sanctions. On June 30,
1998, sanctions were allowed in the amount of
$1,963.20 in attorney’s fees for having to
respond to Wheeler’s irresponsible litigation
conduct. The court, on defendants’ motion to
reconsider, reversed its prior summary judgment
in favor of Huff on the sec. 1692g(a) notice
issue and dismissed the last of Huff’s claims for
damages. The district court closed the
proceedings by holding that, since all of Huff’s
claims had failed, she could not be considered
"successful" under the FDCPA so as to be entitled
to attorney’s fees. The first appeal to this
court was then initiated by Huff.
This court in considering Huff’s initial appeal
in an unpublished order dated June 1999 began
with this succinct paragraph:
The issue in this case is whether a debt
collector who has sent the debtor a deficient
notice under the Fair Debt Collection Practices
Act, 15 U.S.C. sec. 1692 et seq. (FDCPA), can
avoid liability if the debtor is subsequently
(and very quickly) represented by an attorney. We
hold that the debt collector cannot escape
liability, but we also hold that the debtor’s
attorney can be sanctioned for dropping a
veritable blizzard of paper on the courthouse in
violation of a judge’s order.
This court affirmed the district court on a
variety of issues, reversing and remanding only
on the district court’s last minute change of
mind which had granted summary judgment in favor
of the defendants on the sec. 1962g(a) notice
issue despite the fact that the firm’s demand
letter did not meet the requirements set forth in
the statute.
Back in the district court, on July 8, 1999,
Huff filed a jury demand. On August 12, 1999,
with leave of the court, the defendants filed an
answer to Huff’s second amended complaint.
Following that answer, Huff filed a motion for
default judgment as to Counts II and III of the
second amended complaint. On August 31, 1999, the
district court struck Huff’s jury demand as
untimely. On September 20, 1999, the district
court denied Huff’s motion for default judgment
and granted a motion by the defendants for
sanctions, awarding them their attorney’s fees
incurred in defending against the motion for
default judgment. The court on remand then
reconsidered Huff’s damages for the sec. 1962g(a)
violation. No doubt it came as a relief to the
district judge that the parties stipulated that
the issue could be resolved on the pleadings as
they stood without further oral argument./4 The
district court on March 20, 2000 held Huff was
entitled to compensatory damages, but because, in
her first appeal to this court, Huff failed to
challenge a district court order limiting her
damages, Huff’s damages were limited to only
those damages sustained between her receipt of
the Clinic’s faulty demand letter and the
retention of her daughter as her counsel. Huff
sought $100 in compensatory damages, which the
court awarded without objection. Furthermore,
where a violation of the FDCPA is established,
the plaintiff may be entitled to additional
statutory damages not to exceed $1,000 under 15
U.S.C. sec. 1692k(a)(2). To determine the amount
of statutory damages, the court may consider "the
frequency and persistence of noncompliance by the
debt collector, the nature of such noncompliance,
and the extent to which such noncompliance was
intentional." 15 U.S.C. sec. 1692k(b)(1). The
district court, after considering these factors,
awarded Huff additional damages in the amount of
$1,000. The court also awarded Huff costs in the
amount of $120 to cover her filing fee, without
objection by defendants. The court then turned to
Huff’s request for attorney’s fees and expenses
totaling $121,080, including $4,086.10 in
expenses. The district court found Wheeler’s
justification for the fees and expenses in those
amounts to be deficient, but allowed her $13,788
in attorney’s fees as reasonable, after
considering Wheeler’s limited degree of success,
and after excluding from the fee request
excessive time charges for relatively simple
claims. Wheeler’s claim for expenses was reduced
to $1,461.13. Stricken were items that the court
deemed unrecoverable, for instance, Wheeler’s
claimed expenses in attending several educational
seminars on debt collection and an amount for the
sanctions which had been imposed against her.
The district court, however, made one harmless
error in its order; an error it could not
reasonably have anticipated. In the last short
line of its order, the court wrote, "This matter
is now terminated," but it was not. In this
second appeal, Wheeler raises several issues, the
first of which is that the district court erred
when it denied Wheeler a jury trial on the issue
of damages sought after the first appeal to this
court. Rule 38 of the Federal Rules of Civil
Procedure provides that any party may demand a
trial by jury for a jury issue by serving upon
the other party a jury demand at any time after
the commencement of the action, but not later
than ten days after service of the last pleading
directed to such issue, otherwise a jury is
waived. Fed. R. Civ. P. 38(b), (d).
Wheeler, as noted, had filed her second amended
complaint in March 1996. The defendant filed a
motion for summary judgment, and Wheeler filed a
cross-motion for summary judgment in April 1996.
Wheeler then filed a jury demand in July 1997.
The defendants filed a motion to strike Wheeler’s
jury demand as untimely as well as an answer to
the second amended complaint. Wheeler’s original
complaint and her first amended complaint had not
sought a jury trial. Wheeler claimed her jury
demand was served prior to defendants’ answer to
the second amended complaint and was therefore
timely. The district court held otherwise in an
order dated August 31, 1999, stating that Wheeler
had waived her right to a jury. The district
court relied on Fed. R. Civ. P. 38 as well as our
opinion in Communications Maintenance, Inc. v.
Motorola, Inc., 761 F.2d 1202 (7th Cir. 1985), in
which we held that supplemental pleadings do not
extend the jury demand time, except as to any new
issues which are raised for the first time by the
supplemental pleadings. The district court noted
that the issue to be tried had been before the
court "for a long, long time. Indeed, it was the
basis for plaintiff’s partially successful
appeal." In this case, no new factual issues were
raised in the second amended complaint. See id.
at 1208 ("[W]e must decide at what point . . .
the pleadings finally framed the various issues
to be put before the trier-of-fact; that is, when
did the pleadings cease raising new factual
issues and begin simply alleging new legal
theories or particularized facts."). Because
defendants had filed an answer to Huff’s initial
complaint on May 22, 1995, Wheeler’s jury demand
was served late, and her right to a jury trial
was, therefore, waived.
Wheeler has little to complain about because,
as she conceded at oral argument, Huff claimed
actual damages, excluding liability for
attorney’s fees for defending the underlying
state action, of $100, and the district court
awarded Huff that amount./5 Her statutory
damages were limited to $1,000, and the district
court also awarded her that full amount. The only
damages issue remaining to be determined was
Wheeler’s reasonable attorney’s fees in the FDCPA
case, but attorney’s fees are a matter for the
court, not the jury. We find no error.
The next appeal issue is the denial by the
district court of Wheeler’s motion for default
judgment on Counts II and III of the second
amended complaint and the sanctions imposed on
her for filing it. There was, however, nothing
left in the complaint for which Wheeler might be
entitled to default judgment. The district court
granted summary judgment in favor of defendants
on Counts II and III before the first appeal.
This court affirmed the district court, except on
Count I, which was reversed and remanded for
further proceedings. Wheeler is not now entitled
to a default judgment on the dismissed counts,
the dismissal of which was previously affirmed by
this court. The firm, understandably, never filed
an answer to the counts already history.
Wheeler’s arguments to the contrary are totally
without merit.
We also find no fault with the district court’s
decision to award sanctions against Wheeler in
connection with her motion for default judgment.
On September 20, 1999, the district court entered
an order granting the "Defendants their
reasonable costs and fees in connection with
resisting the frivolous motion for default
judgment." The September 20 order gave the
Dobbins firm seven days to submit an affidavit
itemizing the fees and costs sought. Wheeler
would then have seven days following the
submission of that affidavit to file a response.
On September 24, 1999, the firm filed an
affidavit seeking $720 in attorney’s fees.
Wheeler failed to file a response. The district
court, however, never entered an order specifying
an amount for the sanctions granted on September
20. The final judgment, entered March 20, 2000,
included a judgment against Wheeler in the amount
of $1,963.20 for the sanctions ordered on June
30, 1998, but did not include any reference to
the September 20, 1999 sanctions. In a March 23,
2000 letter to Wheeler, the firm acknowledged
that the district court failed to enter a
judgment in any amount for the September 20
sanctions. The firm then proposed that it receive
a credit of $2,683.20 when it tendered judgment,
an amount which reflects both the $1,963.20 and
$720 amounts. The firm tendered judgment
accordingly. Because the March 20 judgment does
not reflect the September 20 sanctions, we vacate
the judgment. We will leave it up to the district
court to straighten out this matter and issue an
amended judgment.
Wheeler also alleges the district court abused
its discretion by awarding sanctions against her
despite some procedural irregularities to which
she did not object below. It is clear in the
record that there was no abuse of discretion in
awarding sanctions under Fed. R. Civ. P. 11 as
they were fully deserved. See Indep. Lift Truck
Builders Union v. NACCO Materials Handling Group,
Inc., 202 F.3d 965, 968 (7th Cir. 2000) ("We
review the district court’s decision regarding
Rule 11 sanctions for abuse of discretion, giving
great deference to the district court’s
decision." (citations omitted)).
Wheeler also complains that the district court
did not allow a hearing on her damage claims. The
district court asked for a list of her witnesses
so that the law firm might depose them, but no
list was ever forthcoming. The district court
stated in its March 20, 2000 order that the
parties stipulated that the matter could be
resolved on the pleadings, without the need for
an evidentiary hearing. Huff challenges this
stipulation for the first time on appeal. In any
event, as previously noted, Huff has conceded her
actual damages were only $100, which the district
court allowed in full. Huff also recovered full
statutory damages. No hearing was necessary.
Wheeler further complains that the district
court did not allow her sufficient discovery.
Wheeler, among other things, sought discovery of
the tax returns of all the defendants and
shareholders in the firm and "all documents"
related to the firm’s relationship to its client,
the Clinic. Wheeler also sought evidence relating
to the Dobbins firm’s attempts to collect debts
from other consumers. Wheeler argues that this
evidence would have supported an award of
substantial actual damages. However, as we have
mentioned, Wheeler concedes her actual damages
were only $100, and that is the amount awarded by
the district court. Wheeler fails to establish
that the district court’s decision resulted in
any actual prejudice, and therefore, her claim of
error fails. See Stagman v. Ryan, 176 F.3d 986,
994 (7th Cir.), cert. denied, 528 U.S. 986 (1999)
(holding that in order to succeed on a claim that
the district court erroneously limited discovery
the appellant must show that the "decision
resulted in actual and substantial prejudice").
Wheeler’s final argument is that the district
court erred in refusing to award the entire
amount of attorney’s fees and expenses sought in
connection with the FDCPA case. As previously
noted, Wheeler sought fees and expenses totaling
$121,080, including $4,086.10 in expenses. The
district court awarded Wheeler $13,788 in
attorney’s fees as reasonable and reduced
Wheeler’s claim for expenses to $1,461.13. As we
recognized in Zagorski v. Midwest Billing Servs.,
128 F.3d 1164 (7th Cir. 1997), trial courts enjoy
"’a decided advantage over appellate courts in
calculating fee awards’" and, therefore, retain
a great deal of discretion in determining the
appropriate award. Id. at 1167 (quoting Carroll
v. Wolpoff & Abramson, 53 F.3d 626, 628 (4th Cir.
1995)). In the present case, the district court
conducted a thorough evaluation of Wheeler’s fee
request, and the resulting decision to reduce the
fees and expenses was well within the court’s
discretion.
Wheeler suggests that these proceedings have
been multiplied, not by her, but only by the
various motions filed by the firm seeking
sanctions from time to time. The district court
answered that argument by labeling it as
"incredible" as it was Wheeler who had "filed
voluminous and cumulative pleadings, and . . .
has continued to rehash ad nauseam settled
issues." No further response is required from
this court.
This second appeal could be expected to do no
more than to generate more fees and expenses.
Sanctions under Fed. R. App. P. 38 may well be
justified. While the firm was initially
admittedly at fault and that is what prompted
this litigation, the litigation has been
unnecessarily prolonged by Wheeler. We trust that
the record in this case does not reflect the true
legal ability of Wheeler who holds a responsible
legal position. We attribute the problems in this
litigation to Wheeler being outside her area of
expertise and her overly zealous efforts in
behalf of her mother and herself. We will,
however, give appellees the opportunity to seek
sanctions in this court within ten days of the
date of this opinion to cover their fees and
expenses in this appeal, but bearing in mind the
sanctions already imposed on Huff and Wheeler and
the firm’s initial wrongdoing. Appellants may
then have an additional ten days to respond to
appellees’ additional claims. This court will
then determine if more sanctions are justified in
the unusual circumstances of this case, and if
so, in what amount. The matter of costs under
Fed. R. App. P. 39 will also be resolved at that
time.
This court, however, adds its own warning that
we can see no reason for appellants to continue
their "blizzard" of paper. This case should have
ended previously, but does end now and here,
except only for the one remaining possible
sanction issue.
The district court is AFFIRMED in all respects,
duly noting its commendable patience and
restraint. The March 20, 2000 judgment, however,
is VACATED, and the matter is REMANDED to the
district court to enter an amended judgment
reflecting the proper amount of attorney’s fees
payable by Wheeler. This court retains
jurisdiction until the remanded matter of fees is
resolved.
/1 In the early stages of this litigation, Huff’s
lawyer and daughter was referred to as Deena
Froehle, but in the present stage of this
litigation she is referred to as Deena H. Wheeler
as appears in the caption of this case. To avoid
confusion, we will refer to her as Wheeler
throughout.
/2 It appears that Huff when she initially signed an
agreement to pay the Clinic for its medical
services had unilaterally crossed out a printed
contract provision authorizing the Clinic to also
collect, if necessary, its attorney’s fees
incurred in collecting the debt.
/3 Since the issue in this appeal is largely one of
Wheeler’s litigation tactics on behalf of her
mother and herself we sometimes refer only to
Wheeler.
/4 Wheeler disputes that stipulation for the first
time on appeal.
/5 As we noted in our June 2, 1999 unpublished
order, Huff, in her first appeal to this court,
failed to challenge the district court order
limiting her damages to the time period beginning
with her receipt of the demand letter up to the
point at which she retained counsel. It is too
late to raise that issue in this appeal. Wheeler
cannot now claim as actual damages the full
amount she allegedly charged her mother for
defending the underlying state action, $127,000,
which we note is much more than Huff’s original
bill from the Clinic.