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Morrison v. North American Recovery

United States District Court, D. Colorado

April 13, 2017



          MICHAEL J. WATANABE United States Magistrate Judge

         This case is before this Court pursuant to the Order of Reference entered November 10, 2016, and the parties' unanimous consent to disposition of this action by a United States Magistrate Judge.

         I. Factual Background

         Plaintiff initiated this Fair Debt Collection Act (“FDCA”) action by filing a Complaint on September 13, 2016. (Docket No. 1.) Defendant filed an Answer (Docket No. 8) on October 17, 2016, and then filed a Motion for Summary Judgment on November 10, 2016. (Docket No. 11.) Plaintiff filed a Motion to Dismiss Case (Docket No. 24) on December 15, 2016. In response, on January 4, 2017. Defendant filed a Motion for Sanctions. (Docket No. 26.)

         Defendant seeks sanctions pursuant to 28 U.S.C. § 1927 and Fed.R.Civ.P. 11(c)(3). Defendant argues that Plaintiff's counsel was informed prior to filing the Complaint that her client's claims were not supported by fact or law, and that by filing it anyway, Plaintiff's counsel acted unreasonably and vexatiously and caused Defendant to incur costs in filing an Answer and Motion for Summary Judgment.

         II. Analysis

         a. 28 U.S.C. § 1927

         Section 1927 provides that “[a]ny 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. “Section 1927 awards are appropriate ‘only in instances evidencing a serious and standard disregard for the orderly process of justice.'” Sangui Biotech Int'l, Inc. v. Kappes, 179 F.Supp.2d 1240, 1243 (D. Colo. 2002). The Court's analysis focuses on the objective nature of the conduct, not the attorney's subjective intent. Hamilton v. Boise Cascade Exp., 519 F.3d 1197, 1202 (10th Cir.2008). “Sanctions are appropriately imposed under § 1927 on counsel . . . who continue to pursue claims that are no longer reasonable.” Sangui Biotech, 179 F.Supp.2d 1244 at 1244.

         Relevant to this case, “it is widely recognized that § 1927 only applies to the multiplication of proceedings and not to the initiation of proceedings.” Barrientos-Sanabria v. Holte, No. 11-cv-00838-KLM, 2013 WL 3270597, at *4 (D. Colo. June 27, 2013). Because § 1927 covers only the multiplication of “the proceedings in any case, ” this “unambiguous statutory language necessarily excludes the complaint that gives birth to the proceedings, as it is not possible to multiply proceedings until after those proceedings have begun.” Steinert v. Winn Grp., Inc., 440 F.3d 1214, 1224-25 (10th Cir. 2006). “Section 1927 is not a ‘catch all' provision designed to serve as a basis for sanctioning any and all attorney conduct that courts want to discourage. . . . Instead, § 1927 is an ‘incentive for attorneys to regularly re-evaluate the merits of their claims and to avoid prolonging meritless claims.'” Barrientos-Sanabria, 2013 WL 3270597, at *4 (quoting Steinert, 440 F.3d at 1224).

         With this authority in mind, it is apparent that Defendant cannot rely on § 1927 as a basis for sanctions, as its motion is aimed squarely at Plaintiff's counsel's decision to initiate, rather than multiply, the proceedings. Defendant complains that it incurred costs associated with filing its Answer and Motion for Summary Judgment, preparing and serving its initial disclosures, and drafting a proposed Scheduling Order. However, all of these tasks were undertaken in response only to Plaintiff's Complaint, not to any other actions taken by Plaintiff or her counsel. Plaintiff's counsel did not file a response to the Motion for Summary Judgment (Docket No. 11); instead, she offered to dismiss her case with prejudice, and filed a motion requesting the Court to do so. (Docket No. 24.) In short, she re-evaluated the merits of her claim and took action to avoid prolonging a meritless case, which is exactly the behavior encouraged by § 1927.

         The cases cited by Defendant in support of its argument that § 1927 sanctions are appropriate where a party is forced to expend unnecessary fees and costs associated with filing a motion to dismiss and/or for summary judgment are distinguishable. These cases involved contested dispositive motions, see Riddle v. Assocs., P.C., 414 F.3d 832 (7th Cir. 2005); Longmoor v. Nilsen, 312 F.Supp.2d 352, 363 (D. Conn. 2004), or instances where the plaintiff “insist[ed] upon the relinquishment of a right as a condition of discontinuing a frivolous claim.” Viola Sportswear v. Minum, 574 F.Supp. 619, 621 (E.D.N.Y. 1983). In contrast, Plaintiff, in response to the Motion for Summary Judgment (Docket No. 11), simply moved to dismiss her claims with prejudice, thereby effectively ending the action.

         The Court does not find that Plaintiff unreasonably and vexatiously multiplied the proceedings in this case. Accordingly, Defendant's Motion for Sanctions must be denied as to this basis.

         b. ...

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