Steinert v. Winn Group, Inc.

• Decision Date: 13 March 2006
• Docket Number: No. 04-3392.,04-3392.
• Parties: Lawrence J. STEINERT, Plaintiff, v. WINN GROUP, INC.; James G. Winn, Defendants-Appellees. John B. Gage, Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

440 F.3d 1214

Lawrence J. STEINERT, Plaintiff, v. WINN GROUP, INC.; James G. Winn, Defendants-Appellees.

John B. Gage, Appellant.

No. 04-3392.

United States Court of Appeals, Tenth Circuit.

March 13, 2006.

COPYRIGHT MATERIAL OMITTED

Submitted on the briefs:^* John B. Gage, Gage Law Firm, Overland Park, KS, Pro se-Appellant.

J. Nick Badgerow, Jeannie DeVeney, Michael C. Leitch, Spencer, Fane, Britt &amp Browne LLP, Overland Park, KS, for Appellees.

Before McCONNELL, ANDERSON, and BALDOCK, Circuit Judges.

McCONNELL, Circuit Judge.

This is an appeal from a district court order awarding appellees attorney fees under 28 U.S.C. § 1927 against plaintiff's attorney, pro se appellant John Gage. Gage argues that (1) the award was inconsistent with the district court's denial of fees under 42 U.S.C. § 1988 and Fed. R.Civ.P. 11; (2) the award violated due process; (3) § 1927 applies only to the multiplication of proceedings and not to the initiation of proceedings; (4) § 1927 was inapplicable to punish his numerous requests for extensions of time; and (5) appellees' motion for fees violated various procedural rules. Finding partial merit in Gage's third argument, we affirm in part, reverse in part, and remand for further proceedings.

BACKGROUND

Lawrence Steinert retained attorney Gage to sue James Winn and The Winn Group, Inc. (collectively, "Winn"). Gage filed a complaint in federal court in December 1998, and served it in April 1999. He alleged that Winn offered to represent Steinert in finding work as an actuary. Steinert apparently accepted and was notified of a job opportunity with Scruggs Actuarial Service, Inc., located in Texas. During an interview with Scruggs, Steinert was allegedly "induced through fraud to provide Scruggs with fifteen ... hours of actuarial services" as part of a conspiracy between Scruggs and Winn "to obtain slave labor." Aplt.App. at 7D. Steinert signed a "secrecy agreement," but he refused to sign an employment contract because it contained a provision requiring that he "reimburse Scruggs ... for any recruiting fee" if the employment relationship ended within three years. Id. Although Steinert never became a Scruggs employee, he filed a wage claim with the Texas Work Force Commission for the work performed during the interview. Scruggs later sued Steinert in state court, claiming a breach of the secrecy agreement.

Based on these allegations, Gage formulated nine claims for relief against Winn: (1) violation of the "Kansas Private Employment Agency Act," (KPEA) id. at 7F;¹ (2) violation of the "Texas Personnel Employment Services Act," (TPEA) id. at 7H;² (3) breach of fiduciary duties; (4) breach of the covenant of good faith and fair dealing; (5) negligence; (6) "exposing plaintiff to litigation with ... Scruggs," id. at 7M; (7) fraud; (8) conspiracy; and (9) violation of 42 U.S.C. §§ 1983 and 1985 regarding, among other things, "plaintiff's right against involuntary servitude and peonage," id. at 7P.

On April 26, 1999, Winn answered and moved to dismiss the KPEA claim, the fiduciary duty claim, the good-faith-and-fair-dealing claim, the litigation-exposure claim, the Title 42 claims, and a portion of the TPEA claim. In response, Gage embarked on a five-month extension-seeking campaign, during which he requested nine extensions of time to file an opposition to Winn's motion to dismiss. The requests cited Gage's problems with support staff, computers, office equipment, "and other problems too numerous to detail," Aplt App. at 88, as well as family illnesses, fatigue, personal doctor visits, responsibilities on other cases, the complexity of the instant case, attendance at a legal convention, and a camping trip with his son. Gage also sought six extensions of time to file a motion for leave to amend or add parties, five extensions to make Fed. R.Civ.P. 26(a) initial disclosures, four extensions to respond to a demand for documents, three extensions to provide medical, employment and tax releases, three extensions to identify authority for any attorney fee award, two extensions to serve a preliminary witness list, and two extensions to file a certificate of financial interest. Winn's counsel agreed to many of the extensions and the district court expressly granted most of them, citing good cause or excusable neglect, and sometimes both. Most of the extension requests violated Rule 6.1(a) of the United States District Court Rules for the District of Kansas, as the requests were made after the previously extended deadlines.³

But on October 15, 1999, Winn's counsel moved to dismiss for failure to prosecute. On October 20, the district court reviewed the litigation's history and stated:

The Court recognizes that some of plaintiff's requested extensions, viewed in insolation, may have been properly based on time constrictions or excusable neglect. A review of the entire course of the litigation, however, shows a pattern of neglect which the Court cannot characterize as excusable.

Aplt.App. at 104. Nevertheless, the district court declined to dismiss the case, and instead gave Gage forty-eight hours to (1) file any motion to amend/add parties and any opposition to Winn's April motion to dismiss, and (2) provide initial disclosures and respond to Winn's production demand. But the court cautioned Gage that it might "order that plaintiff and/or his counsel pay the costs and attorneys' fees attributable to their default" if Gage failed to timely comply. Aplt.App. at 105.

On October 22, 1999, Gage filed a motion for leave to amend the complaint by adding four more claims against Winn⁴ and adding Scruggs as a defendant facing ten claims.⁵ In the motion, Gage revealed for the first time that the "primary factors" causing the delays in the case were his difficulties in obtaining a determination from Steinert and his Texas counsel regarding their intent to proceed against Winn and Scruggs in state court. Aplt. App. at 182D.⁶ The district court denied leave to amend.

Gage also filed a seventy-seven page opposition to Winn's April motion to dismiss. Therein, Gage conceded that his client's 42 U.S.C. § 1983 claim failed because there was no state action. But Gage devoted fourteen pages to arguing that Winn and Scruggs were liable under 42 U.S.C. § 1985(2)⁷ and (3).⁸ Specifically, regarding subsection (2), Gage argued that Winn and Scruggs had conspired to sue Scruggs' employees and Steinert in state court "to keep present employees cowering, captive, and unable to mount any challenges to their status as peons based upon the debt bondage Scruggs has put into effect through [its employment] contracts." Aplt.App. at 169. Regarding subsection (3), Gage argued that Winn and Scruggs had conspired to violate Steinert's "constitutional right against involuntary servitude and peonage, both of which are regarded as badges of slavery."⁹ Id. at 171.

Gage then embarked on another extension-seeking campaign. He untimely sought more time to oppose a motion to compel the execution of a medical release form. He resurrected his prior excuses and added that he had suffered two car accidents, "litigat[ed] ... the dissolution of his earlier office-sharing arrangement," id. at 277, experienced marital difficulties, and struggled with "other problems too numerous and personal to mention," id. at 278. After his own suggested deadline expired, Gage sought to extend the time even further, complaining of a "total computer breakdown." Id. at 281. Even after the district court ordered Gage to produce the executed release, Gage failed to comply, prompting a motion to dismiss from Winn.

Gage also sought an extension in which to oppose a motion to compel the execution of an employment-records release form, describing at length his "continuing and taxing time problems in maintaining his workload." Id. at 292. And nearly one month after the scheduling order's date for the close of discovery, Gage moved to extend the deadlines for disclosing expert witnesses, propounding written discovery, and completing all discovery. He cited staffing problems and his recent diagnosis with "adult Attention Deficit and Hyperactivity Disorder." Id. at 361. Gage also stated that he had telephoned Winn's counsel and offered to dismiss the case because Steinert "could not litigate in two different states," id. at 362, but that Winn's counsel responded by insisting in a letter that dismissal be conditioned on the payment of Winn's fees and costs. In the letter, dated January 10, 2000, Winn's counsel commented that "the Court is empowered to award attorneys' fees under 28 U.S.C. § 1927 and Rule 11," and that he would be seeking fees under those provisions. Id. at 1214.

On January 27, 2000, the district court granted in part and denied in part Winn's April 1999 motion to dismiss. The court dismissed Steinert's § 1985 claims, observing that conspiracies motivated by economic animus are not actionable and that there were no allegations of discrimination similar to racial bias. Also dismissed were Steinert's KPEA, § 1983, and litigation-exposure claims, as well as a portion of Steinert's TPEA claim.

On March 17, 2000, facing another motion to compel and his client's scheduled deposition, Gage moved to dismiss the case with prejudice, stating that Steinert was unable to continue financially. The district court granted the motion, dismissed the case, and on August 3, 2000, entered judgment in Winn's favor.

On August 11, 2000, Winn filed a two-page "Motion for Award of Attorney's Fees and for Discovery Related Thereto," citing 42 U.S.C. § 1988 and Fed.R.Civ.P. 41(a)(2). Aplt.App. at 416. On September 26, Winn filed a thirteen-page document entitled "Suggestions in Support" of the motion, again citing § 1988 and Rule 41(a)(2), but adding 28 U.S.C. § 1927 as justifying a fee award against Gage primarily for multiplying the proceedings by seeking numerous extensions of time, but also for asserting frivolous claims. Aplt. App. at 422. Winn asked the...