Downey v. Clauder
| Decision Date | 25 July 1994 |
| Docket Number | 93-3547,Nos. 93-3504,s. 93-3504 |
| Citation | 30 F.3d 681 |
| Parties | Harriette Williams DOWNEY, Plaintiff, Mark A. Vander Laan, Attorney-Appellant/Cross-Appellee, v. Michael A. CLAUDER, Defendant-Appellee/Cross-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Mark D. Tucker, Norton Victor Goodman (argued and briefed), Benesch, Friedlander, Coplan & Aronoff, Columbus, OH, for Mark A. Vander Laan.
James B. Helmer, Jr. (briefed), James B. Helmer, Jr., Robert C. Neff, Jr. (argued), Helmer, Lugbill, Martins & Neff, Cincinnati, OH, for Michael A. Clauder.
Before: MARTIN, SUHRHEINRICH, and DAUGHTREY, Circuit Judges.
Attorney Mark Vander Laan maintains that the district court erred in holding him in contempt of court for failing to timely withdraw a copy of a civil complaint forwarded to the Cincinnati Bar Association. Michael A. Clauder cross appeals, contending that the court erroneously converted his motion for sanctions into a contempt proceeding. For the following reasons, we reverse the judgment of the district court.
The facts underlying this matter are largely undisputed. Harriette Williams Downey is the widow of James R. Williams, former head of The Western and Southern Life Insurance Company and co-owner of the Cincinnati Reds. Following Williams' death in 1986, Downey inherited an estate valued at over $43 million. For help in managing her affairs, Downey turned to her nephew-in-law, Michael A. Clauder, a lawyer licensed to practice in Ohio. Over the next few years, Clauder served as Downey's attorney and financial adviser.
On May 24, 1990, Downey filed suit against Clauder in federal court. In a three-count complaint, Downey alleged that Clauder had misappropriated assets from the estate, charged Clauder with breach of fiduciary duty and legal malpractice, and sought $27 million in damages. Jurisdiction was premised upon diversity of the parties.
The next day, Mark A. Vander Laan, counsel for Downey, forwarded a copy of the complaint to Edwin W. Patterson, III, Bar Counsel for the Cincinnati Bar Association. The letter of transmittal accompanying the complaint read as follows:
In accordance with D.R. 1-103, I would like to submit a copy of the Complaint which was filed yesterday in the United States District Court for the Southern District of Ohio captioned Harriette R. Williams Downey v. Michael A. Clauder, et al., Case Number C-1-90-413. While we are obviously in the early stages of litigation, we are prepared to cooperate in any investigation of the conduct set forth in the Complaint as may be appropriate.
Disciplinary Rule 1-103(A) of the Ohio Code of Professional Responsibility directs a "lawyer possessing unprivileged knowledge of a violation of DR 1-102" to "report such knowledge to a tribunal or other authority empowered to investigate or act upon such a violation." Disciplinary Rule 1-102, in turn, proscribes a lawyer's violation of any disciplinary rule and forbids attorney participation in illegal, immoral, or fraudulent conduct.
On November 20, 1991, Vander Laan, acting on behalf of Downey, filed a formal grievance against Clauder with the Cincinnati Bar Association. The grievance asserted that Clauder harassed Downey by repeatedly sending her written communications after she had dismissed him as her attorney. In large part, the grievance was distinct from the pending civil litigation.
Meanwhile, ongoing settlement discussions between Downey and Clauder finally reached fruition. During a December 19 settlement conference in the district judge's chambers, Clauder consented to judgment being entered against him on Counts One and Two of the complaint. He also agreed to execute a promissory note payable to Downey in the amount of $150,000. Downey, in turn, assented to the total resolution of her claims upon satisfaction of the promissory note.
On December 23, Clauder, having just received notice from the Bar Association of Downey's November 20 grievance, refused to execute the settlement agreement. To resolve the deadlock, the district court conferred with counsel for the parties via telephone late that afternoon. During the conference call, Clauder agreed to execute the settlement agreement if Vander Laan would withdraw the Bar grievance.
In accordance with the discussions, Vander Laan advised Hollis A. Moore, III, of the Cincinnati Bar Association's Grievance Committee by letter dated December 30 that he wished to withdraw "the complaint set forth in the November 20th letter." A few days later, Clauder's counsel notified Moore that the "litigation underlying Mr. VanderLann's grievance has been resolved," and expressed his desire "that, under these circumstances, the Grievance Committee will consider this matter resolved and take no further action with respect to Mr. VanderLaan's November 20, 1991, grievance." As per the parties' agreement, the district court entered judgment in favor of Downey on December 30.
In May 1992, Clauder learned that the Grievance Committee was pursuing an investigation of the allegations contained in Downey's civil complaint despite the parties' December 30, 1991, settlement of the civil action. In response, Clauder filed a motion in the district court on May 29 seeking to "enforce" the settlement agreement.
On July 30, 1992, the district court granted Clauder's motion. 811 F.Supp. 338. The district court observed: Concluding that Clauder intended the settlement agreement "to include the withdrawal of all grievances," the district court ordered Downey to withdraw the civil complaint filed with the Bar Association on May 25, 1990. The order did not specify a time period within which Vander Laan was required to act.
Immediately upon receipt of the court's order on August 3, 1992, Vander Laan arranged to have a copy of the order delivered to Bar Counsel Patterson. Then, on August 17, Vander Laan sent a letter to Patterson explaining the order and asking the Grievance Committee to consider any grievance against Clauder to be withdrawn.
In the meantime, the Cincinnati Bar Association forwarded a formal disciplinary complaint to the Board of Commissioners on Grievances and Discipline of the Supreme Court of Ohio on August 4. Following review by a probable cause panel, the Board of Commissioners filed a formal complaint against Clauder on August 17.
Shortly thereafter, Downey advised the district court that Clauder had failed to turn over $100,000 in recently received insurance proceeds to Downey and moved to enforce the settlement agreement. Clauder responded by filing a motion for sanctions. In addition to alleging that Downey's motion was frivolous, Clauder asserted that Vander Laan deliberately disobeyed the court's July 30 order by failing to notify the Bar Association promptly that all complaints against Clauder were withdrawn. According to Clauder, Vander Laan's delay resulted in the filing of the formal complaint against Clauder by the Board of Commissioners on August 17.
On December 9, the district court granted Downey's motion to enforce the settlement and ordered Clauder to transfer the insurance proceeds to Downey. Concluding that Vander Laan had failed to comply with its July 30 order in a timely manner, the district court also granted Clauder's motion for sanctions. As the district court reasoned:
During Mr. Vander Laan's delay, charges were, indeed, filed against Mr. Clauder with the Board of Commissioners on Grievances and Discipline of the Supreme Court of Ohio. By failing to comply promptly with this Court's Order without legitimate excuse, Mr. Vander Laan has allowed disciplinary proceedings to go forward against Mr. Clauder, which probably would have been dropped had he complied with this Court's Order.
Consequently, we conclude that fairness requires Plaintiff's counsel, Mark Vander Laan, be held liable under 28 U.S.C. Sec. 1927 (1992) for the attorney's fees and costs incurred by Mr. Clauder in defending the disciplinary proceedings against him.
At no time did the district court characterize its finding in terms of contempt.
On December 21, Vander Laan moved for reconsideration of the district court's order imposing sanctions. In support of his contention that the court's conclusion was based on faulty assumptions, Vander Laan submitted the affidavits of Bar Counsel Patterson and Board of Commissioners Secretary Jonathan W. Marshall. Both men confirmed that Vander Laan's "untimely" compliance with the district court's order did not "cause" disciplinary action against Clauder to proceed. In Patterson's words:
Had Mark Vander Laan's letter to me of August 17, 1992, been received at any time prior to the time it was received on August 18, 1992, the Grievance Committee would not have deviated from its course of action, because even if Mrs. Downey became unavailable as a witness, there existed sufficient other evidence to support probable cause that Mr. Clauder had violated the Code of Professional Responsibility.
In light of this information, the district court vacated its December 9 order imposing sanctions and notified the parties that it would hold a hearing on Vander Laan's motion for reconsideration.
On March 10, 1993, the district court heard oral arguments regarding the motion. Throughout the hearing, counsel confined their arguments to whether Vander Laan should be sanctioned pursuant to 28 U.S.C. Sec. 1927. Section 1927 provides:
Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court...
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