782 F.2d 1056 (D.C. Cir. 1986), 85-5344, American Sec. Vanlines, Inc. v. Gallagher

Docket Nº:85-5344.
Citation:782 F.2d 1056
Party Name:AMERICAN SECURITY VANLINES, INC., et al. v. Robert J. GALLAGHER, Appellant.
Case Date:January 31, 1986
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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782 F.2d 1056 (D.C. Cir. 1986)



Robert J. GALLAGHER, Appellant.

No. 85-5344.

United States Court of Appeals, District of Columbia Circuit

January 31, 1986

Argued Jan. 15, 1986.

Douglas J. Rykhus, Washington, D.C., for appellant.

Bruce E. Mitchell, for appellees.

Before GINSBURG and SILBERMAN, Circuit Judges, and McGOWAN, Senior Circuit Judge.

Opinion Per Curiam.


Defendant-appellant Robert J. Gallagher, an attorney, dishonored an agreement settling an action in which he had been charged with malpractice and breach of fiduciary duty. The agreement, incorporating modifications suggested by the trial judge, was entered as a district court judgment on March 1, 1984. Gallagher made initial payments pursuant to the agreement but soon defaulted, prompting plaintiffs' application to the district court, on May 22, 1984, to enforce the settlement. The district court considered Gallagher's several challenges to the agreement and, in a comprehensive Memorandum, rejected the attacks as meritless. American Security Vanlines, Inc. v. Gallagher, No. 83-0074 (D.D.C. Feb. 27, 1985). Gallagher now appeals from the district court's order enforcing the settlement.

We affirm and, on our own motion, direct appellant and attorney for appellant to pay the costs and counsel fees reasonably incurred by appellees in responding to an appeal that fully warrants the characterization "frivolous." See 28 U.S.C. Secs. 1912, 1927; Fed.R.App.P. 38; cf. Fed.R.Civ.P. 11.

Gallagher offers no tenable argument for disturbing the careful adjudication of this case by the district court. In the main he repeats implausible, far-fetched, or tardily-raised objections answered with thoroughgoing clarity in the district

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court's Memorandum. His central thrust is that he should be released from an undertaking he now regrets because, when he entered into the settlement agreement, he was in a "distraught frame of mind occasioned by his belief that he would lose the [malpractice/breach of fiduciary duty] case," whereupon he would face a judgment he could not pay and, eventually, referral to the Grievance Committee leading to disbarment. Brief of Appellant at i, 9, 10.

Neither in his brief nor at oral argument did Gallagher suggest any distinction between his case and that of any other attorney charged with malpractice or serious breach of duty who enters a settlement, understandably with a heavy mind, and later regrets his agreement. Instead, Gallagher urged that his plight is "virtually the same" as that of a personal injury plaintiff, destitute, sorely disabled, unfamiliar with the language of the law, indeed, barely able to speak English, who is pressed into signing a release for a relatively modest sum by her own attorney. Id. at 10 (asserting as authority controlling the instant case Autera v. Robinson, 419 F.2d 1197 (D.C.Cir.1949)). The analogy is not well made. However, it typifies the quality of argument imposed upon the district court, and now upon us, in this case. For further exposition of Gallagher's stout resistance to the objectively reasonable settlement, we include as an appendix to this disposition the cogent Memorandum filed by the district court. No additional comment from this bench is necessary. See D.C.Cir.R. 13(c).

This appeal, we conclude, has unconscionably delayed secure receipt by appellees of the periodic payments Gallagher agreed to make in exchange for the termination of the malpractice/breach of fiduciary duty claims that opened this litigation. Both Gallagher and counsel who advanced frivolous argument for him, thereby multiplying proceedings unreasonably and vexatiously, may be held accountable for the expenses and counsel fees reasonably incurred by appellees in responding to the appeal. See 28 U.S.C. Secs. 1912, 1927; Fed.R.App.P. 38; In re TCI Limited, 769 F.2d 441, 445 (7th Cir.1985). We accordingly order that appellees' costs and counsel fees reasonably incurred on appeal shall be borne jointly and severally by appellant and attorney for appellant. The parties shall endeavor diligently and in good faith to agree upon the fee. If they are unable to reach an agreement promptly, appellees shall submit to the court a statement setting out their counsel's hours and rate for the representation reasonably furnished in this appeal.

The court's mandate in this case shall issue forthwith.

It is so ordered.




Civil Action No. 83-0074





[Filed Feb. 27, 1985]




This action is now before the Court on plaintiffs' motion to unseal and enforce the settlement agreement reached in this matter and defendant's motion for new trial.

Plaintiff American Security Vanlines, Inc. ("ASV") filed suit July 2, 1982. The complaint alleged that defendant Robert J. Gallagher, an attorney with considerable experience in proceedings involving the Interstate Commerce Commission ("ICC"), had committed malpractice in negligently representing ASV in the transfer and sale

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of certain Certificates of Public Convenience and Necessity for interstate motor common carriers from ASV to Gray Moving & Storage, Inc. ("Gray Moving") and the processing of the requisite applications and documentation before the ICC. ASV also alleged that defendant breached a fiduciary duty owed to ASV in undertaking inconsistent and conflicting representation of Gray Moving after agreeing to represent ASV. Specifically ASV asserted that after ASV entered into a contract for sale and temporary lease of an ASV certificate to Gray Moving, Mr. Gallagher submitted additional applications to the ICC on behalf of Gray Moving for new certificates of public convenience and necessity, making it unnecessary for Gray Moving to purchase ASV's certificate and causing Gray Moving to cancel its contract to buy the ASV certificate. ASV sought $237,500 in actual damages plus interest, $500,000 in punitive damages, and attorneys' fees. 1

A trial to the Court began on February 28, 1984. Both sides were represented by counsel. 2 On February 29, after the close of plaintiffs' case, defendant Gallagher took the stand as part of defendant's case. In the course of Mr. Gallagher's testimony, he made a number of statements that plaintiffs characterize as damaging admissions, stating that "I obviously recognized that I made a mistake" and that "later study, and particularly the progression of this case has made me realize I was incorrect and that I should have taken those steps [withdrawal]; I should have withdrawn."

At the request of counsel for defendant, the trial was then recessed for a short period to allow defendant to confer with counsel. Shortly thereafter, at the request of the parties, the trial was recessed for the day to enable the parties to explore the possibility of resolving the dispute by means of a settlement agreement. On March 1, 1984, the Court was presented with a draft agreement to which all parties had tentatively assented and the Court offered a number of suggested modifications that were accepted by the parties. The Court then entered an order reprinted at the margin 3 setting out the settlement

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terms to which Mr. Gallagher and counsel for plaintiffs had agreed. In pertinent part, the settlement agreement required Mr. Gallagher to make payments totalling $290,000 to plaintiffs. Mr. Gallagher's payment obligations to Mr. Breffle were to be evidenced by a note executed by Mr. Gallagher and his wife that was secured by a second mortgage on the principal residence of Mr. and Mrs. Gallagher. In the event of a breach of any provision of the agreement by Mr. Gallagher, the settlement agreement provided for judgment to issue in favor of American Security Vanlines in the amount of $100,000 and in favor of plaintiff Breffle for $300,000, less any amounts previously paid under the terms of the agreement. The Court ordered the settlement agreement filed under seal.

On May 22, 1984, plaintiffs, alleging that defendant had breached the settlement agreement, filed a motion for its enforcement. According to an affidavit from Mr. Breffle, Mr. Gallagher sent Mr. Breffle only two checks for $4,000 each to meet his obligation to pay Mr. Breffle $4,000 per month. Mr. Breffle reported that the second of these checks had been returned to his bank by Mr. Gallagher's bank with a notation that the...

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