Dreiling v. Peugeot Motors of America, Inc., 83-1317

• Decision Date: 24 July 1985
• Docket Number: No. 83-1317,83-1317
• Citation: 768 F.2d 1159
• Parties: 1985-2 Trade Cases 66,720 Lloyd J. DREILING, Steven J. Dreiling, and L.J. Dreiling Motor Company, Inc., a Colorado Corporation, Plaintiffs-Appellants, Richard B. Podoll, Appellant, v. PEUGEOT MOTORS OF AMERICA, INC., a Delaware Corporation, Automobile Peugeot, a French Corporation, Peugeot, S.A., a French Corporation, Chrysler Corporation, a Delaware Corporation, Syd Dorn, Lou Bartlett, and Pierre LeMaire, Defendants, William McMullin, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1159

768 F.2d 1159

1985-2 Trade Cases 66,720

Lloyd J. DREILING, Steven J. Dreiling, and L.J. Dreiling Motor Company, Inc., a Colorado Corporation Plaintiffs-Appellants Richard B. Podoll, Appellant, v. PEUGEOT MOTORS OF AMERICA, INC., a Delaware Corporation Automobile Peugeot, a French Corporation, Peugeot, S.A., a French Corporation, Chrysler Corporation, a Delaware Corporation, Syd Dorn, Lou Bartlett, and Pierre LeMaire, Defendants William McMullin, Defendant-Appellee.

No. 83-1317.

United States Court of Appeals, Tenth Circuit.

July 24, 1985.

Hugh A. Burns of Burns & Figa, P.C., and Richard B. Podoll of Podoll and Podoll, P.C., Denver, Colo., for plaintiffs-appellants.

Gregory R. Piche of Spurgeon, Haney & Howbert, Colorado Springs, Colo., for defendants-appellees.

Before BARRETT and SEYMOUR, Circuit Judges, and BOHANON, District Judge. ^*

BARRETT, Circuit Judge.

This is a case of first impression in this court. In this case we are asked to review an order of the district court awarding attorney's fees and costs in the amount of $7,050.00 in favor of William McMullin (McMullin) and against Lloyd J. Dreiling, Steven J. Dreiling, L.J. Dreiling Motor Company, and Richard B. Podoll (Podoll), their attorney, pursuant to 28 U.S.C. Sec. 1927.

On June 15, 1981, Podoll filed a complaint on behalf of the Dreilings against Peugeot Motors of America (Peugeot) and others, including McMullin, a former dealer service representative of Peugeot. Within the complaint, the Dreilings alleged that McMullin had conspired with Peugeot and others to terminate L.J. Dreiling Motor Company's relationship with Peugeot through the submission of fraudulent warranty claims to Peugeot. The Dreilings sought treble damages against each named defendant, including McMullin, in the amount of $5,280,000 pursuant to 15 U.S.C. Sec. 15.

McMullin answered on October 5, 1981, and denied participating in a conspiracy in restraint of trade injurious to Dreilings. McMullin also counterclaimed, alleging that the Dreilings claim against him was "vexatious, wanton and brought in bad faith and for oppressive reasons" (R.Vol. I at 50). McMullin requested that the court award his costs and attorney's fees.

On June 8, 1982, Louis Bartlett, a former employee of the L.J. Dreiling Motor Company, was deposed. Bartlett stated during his deposition that: before L.J. Dreiling hired him he related that when a vehicle came in under warranty they should find "something else to put on the warranty claim" when they submitted the claim to Peugeot (R.Vol. X at 120-121); he did not conspire with Peugeot or any of its representatives to file phony warranty claims; that no one at Peugeot ever suggested that he file phony warranty claims; and that to his knowledge, no one at Peugeot was ever involved in filing phony warranty claims for the L.J. Dreiling dealership. (R.Vol. X at pp. 170-173.)

On July 29, 1982, McMullin filed a motion for summary judgment supported by an affidavit in which he denied any knowledge of or participation in the conspiracy which the Dreilings alleged was undertaken for purposes of terminating their dealer relationship with Peugeot. McMullin's motion for summary judgment and that of Peugeot's were set for hearing on October 21, 1982.

On August 23, 1982, Podoll filed a response on behalf of the Dreilings to McMullin's motion for summary judgment. Within the response Podoll stated, inter alia, that: McMullin's affidavit in support of his motion was largely conclusory and self-serving; there had been limited discovery "into the affairs of Defendant McMullin"; all the facts relative to the liability of McMullin "are solely within the possession of Defendant McMullin and Defendant Peugeot"; "in order to fully understand McMullin's role in this complex litigation" further discovery is necessary; and that as a result of Peugeot's failure to tender responses to the Dreilings' discovery requests, the Dreilings had been unable to develop the facts essential to justify their opposition to McMullin's motion.

On September 1, 1982, a hearing was held on pending motions and an order was issued directing that all responses to the summary judgment motions be filed by September 13, 1982. On October 1, 1982, Podoll filed a second amended complaint on behalf of Dreilings. This complaint, designated "Plaintiff's Amended Antitrust Claims for Relief," incorporated provisions of the first amended complaint and alleged an entirely new basis of antitrust liability. Although this complaint identified McMullin as a defendant, it did not set forth any specific allegations of conspiracy or fault against him, nor did it state any claim for relief against him.

During the October 21, 1982, motion hearing, the following colloquy took place between the court and Podoll:

THE COURT: Could you point those out to us, Mr. Podoll? Why is Mr. McMullin here? That's what we are trying to find out.

MR. PODOLL: McMullin is an employee of Peugeot.

THE COURT: That's fine, but what's--show us the allegation in the Complaint that alleges some legal wrongdoing which would justify damages against Mr. McMullin.

MR. PODOLL: Well, Your Honor, as far as the--as far as the Complaint goes, what we are basically saying about Mr. McMullin is he was the Peugeot agent who was put in a supervisory role by Peugeot in regard to warranty submissions from L.J. Dreiling.

THE COURT: Would you tell me which part of the Complaint it is in which you are basically saying that?

MR. PODOLL: Okay.

THE COURT: People are entitled to fair notice.

MR. PODOLL: Paragraph 19 would be the first paragraph where Mr. McMullin is identified.

THE COURT: Paragraph 19?

MR. PODOLL: Yes. That's where he is first identified and his role is identified.

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THE COURT: That's your first claim for relief?

MR. PODOLL: That's the first claim for relief.

THE COURT: That's now being amended?

MR. PODOLL: That's now being amended.

THE COURT: So that won't be here any more.

MR. PODOLL: No, that will not be here. In the antitrust claim, we will not seek relief against McMullin and Bartlett.

THE COURT: So that's the only place you were seeking relief against McMullin and Bartlett, right?

MR. PODOLL: Your Honor, as I read the original Complaint, we seem to have incorporated the paragraphs. The only issue--Your Honor, thinking about it, I believe that the conspiracy would be the only claim that we would have sought relief against McMullin and Bartlett.

THE COURT: And that's no longer in the case, is it, if I grant your motion?

MR. PODOLL: Yes, Your Honor, I would agree with that. I feel that--you see, if anything, focusing on the lower--

THE COURT: So you are withdrawing the conspiracy claim now?

MR. PODOLL: As it affects McMullin and Bartlett, yes.

THE COURT: So don't you want to dismiss McMullin and Bartlett?

MR. PODOLL: Your Honor, I feel, since we have not named them in the other claims for relief, we really don't have a choice.

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THE COURT: So that if I do allow you to file an amended complaint, Bartlett and McMullin will not be named as defendants, is that right? That's the only place they now appear is in the caption.

MR. PODOLL: Yes, Your Honor. I think that was--

THE COURT: Certainly it doesn't state a claim for relief against them in the present status. I'm reluctant to dismiss a claim for failure to state a claim sua sponte. I normally don't do that but this looks like a case that I should. There is not, in the Complaint as you seek to amend it, that even claims they have even done anything wrong.

MR. PODOLL: Your Honor, I feel that we don't intend to proceed at this point with the claims against McMullin and Bartlett.

THE COURT: Does that satisfy your problem, Mr. Piche.

MR. PICHE: It does, your Honor, except I would like to apply to the Court for some relief for this extraordinary expense we have incurred.

THE COURT: Well, I think you should file a motion under 28 U.S.Code Section 1927, and we'll hear that in a timely way.

MR. PICHE: That's what I intend, Your Honor. Thank you.

R.Vol. VII at 12-16.

In granting the Dreilings motion to amend, the district court also noted:

THE COURT: What I'm going to do, because I think in the spirit of the rules I don't have really much choice, is I'm going to grant the motion to amend conditionally. The first condition is that--that it will be an entirely new complaint filed that will be called "Third Amended Complaint." The second condition is that before that Complaint is accepted for filing, an attorney who is experienced in the litigation of antitrust claims must enter an appearance on behalf of the plaintiffs as co-counsel, or counsel in this case. And with that entry of appearance I want to have filed an affidavit signed by that attorney setting out that attorney's experience in the field of antitrust law.

I think I'm doing you a favor, Mr. Podoll, because if you get to the end of a case like this, if it keeps on being handled this way, you are going to have the biggest malpractice case that ever hit Denver.

That takes care of the motion to amend.

R.Vol. VII at pp. 16-17.

On November 4, 1982, Joseph DiStefano was deposed. Within his deposition DiStefano stated, inter alia: he worked at L.J. Dreiling Motor Company between August and December, 1980; in September, 1980, he talked to McMullin because he was suspicious of the way warranties were being handled; he did not discuss his suspicions with the Dreilings; that he personally refused to sign any warranty claims; and that he told McMullin what he thought was happening relative to the "funny business going on with warranties."

On November 12, 1982, the Dreilings, through Podoll, filed a motion to dismiss McMullin, without prejudice. On November 24, 1982, McMullin filed his motion for attorney's fees and costs. Following McMullin's motion for attorney's fees, Podoll wrote McMullin's counsel under date of December 20, 1982. The letter stated in part:

From your Motion...