Lee v. L.B. Sales, Inc.
| Decision Date | 02 June 1999 |
| Docket Number | 98-3014,Nos. 98-3010,98-3016,98-3017,s. 98-3010 |
| Parties | Kenneth Ray LEE; Lisa Jeanne Ertle; Brenda Osen; Juan Martinez; Amy Schwandt; Glenda Richards; Michael O'Donnell; John Kant; Kim Swanson, on behalf of themselves and all others similarly situated, Plaintiffs, Thomas J. Lyons & Associates, Appellant, v. L.B. SALES, INC., doing business as Continental Motors, a Minnesota corporation, Defendant, Credit Acceptance Corporation, a Michigan corporation, Defendant/Appellee, Community Credit Co., a Minnesota corporation, Defendant, Bankers & Shippers Insurance Company, a Connecticut corporation; First Lenders Insurance Services, Inc., a foreign corporation, Defendants/Appellees, John Doe; Mary Roe, Defendants. Kenneth Ray Lee; Lisa Jeanne Ertle; Brenda Osen; Juan Martinez; Amy Schwandt; Glenda Richards; Michael O'Donnell; John Kant; Kim Swanson, on behalf of themselves and all others similarly situated, Plaintiffs, Thomas J. Lyons & Associates, Appellee, v. L.B. Sales, Inc., doing business as Continental Motors, a Minnesota corporation, Defendant, Credit Acceptance Corporation, a Michigan corporation, Defendant/Appellant, Community Credit Co., a Minnesota corporation; Bankers & Shippers Insurance Company, a Connecticut corporation; First Lenders Insurance Services, Inc., a foreign corporation; John Doe; Mary Roe, Defendants. Kenneth Ray Lee; Lisa Jeanne Ertle; Brenda Osen; Juan Martinez; Amy Schwandt; Glenda Richards; Michael O'Donnell; John Kant; Kim Swanson, on behalf of themselves and all others similarly situated, Plaintiffs, Thomas J. Lyons & Associates, Appellee, v. L.B. Sales, Inc., doing business as Continental Motors, a Minnesota corporation; Credit Acceptance Corporation, a Michigan corporation; Community Credit Co., a Minnesota corporation, Defendants, Bankers & Shippers Insurance Company, a Connecticut corporation, Defendant/Appellant, First Lenders Insurance Services, Inc., a foreign corporation; John Doe; Mary Roe, Defendants. Kenneth Ray Lee; Lisa Jeanne Ertle; Brenda Osen; Juan Martinez; Amy Schwandt; Glenda |
| Court | U.S. Court of Appeals — Eighth Circuit |
Kay Nord Hunt, Minneapolis, MN (Phillip A. Cole, on the brief), for Thomas J. Lyons, appellant/cross-appellant.
James F. Hanneman, Minneapolis, MN (Vernie C. Durocher, Jr., Erik W. Scharf, Richard H. Krochock, Kathy S. Kimmel, James F. Hanneman, on the brief), for Credit Acceptance Corp., et al, appellees/cross-appellants.
BEFORE: FAGG and WOLLMAN, 1 Circuit Judges, and WEBBER, 2 District Judge.
Thomas J. Lyons & Associates appeals from a district court order affirming the magistrate judge's 3 award of sanctions under 28 U.S.C. § 1927 in favor of Credit Acceptance Corporation, Bankers & Shippers Insurance Company, and First Lenders Insurance Services (Defendants). Defendants cross-appeal, claiming that the amount of sanctions ordered by the court was too low. Because neither the magistrate judge nor the district court entered findings to support the sanctions award, we vacate the award and remand to the district court for further proceedings.
Lyons, Richard G. Nadler, and Steven T. Appelget served, at varying times, as counsel for the plaintiffs in the action underlying this litigation. Nadler signed the original complaint in July of 1994, and all three attorneys were listed on the signature block. See Compl. at 41, Appellant's Appx. at 153. After Defendants moved to dismiss the action under Fed.R.Civ.P. 12(b)(6), Nadler filed an amended complaint for the plaintiffs in January of 1995. Nadler's was the only name listed on the signature block. See Am.Compl. at 43, Appellant's Appx. at 196. In February of 1995, the district court sua sponte ordered the plaintiffs to file a second amended complaint. This complaint was signed by Appelget and listed Appelget and Nadler on the signature block. See Second Am.Compl. at 66, Appellant's Appx. at 262. The second amended complaint asserted a variety of state and federal claims and survived the motion to dismiss. It also purported to be a class action. See Second Am.Compl. pp 12-21, Appellant's Appx. at 200-02.
According to Lyons, in early 1995 he and Nadler "parted company" and "Nadler & Associates" continued to represent the plaintiffs. Appellant's Br. at 2; cf. Am. Pretrial Schedule of Apr. 13, 1995, Appellant's Appx. at 104 (). In July of 1995, Nadler filed a motion for class certification on behalf of the plaintiffs. In September of 1995, Lyons' new firm ("Lyons Sawicki Neese & Phelps, P.A.") replaced Appelget and Nadler & Associates as counsel of record for the plaintiffs. See Substitution of Attorneys, Appellant's Appx. at 108. Shortly thereafter, Lyons withdrew the motion to certify the class. See Appellant's Appx. at 272. Defendants moved for summary judgment, which the district court granted in August of 1996. See Tr. of Summ.J. Hr'g, Appellant's Appx. at 34. In January of 1997, Lyons' firm became "Lyons & Associates."
Defendants moved for sanctions under 28 U.S.C. § 1927 "because of plaintiffs' unreasonable and vexatious conduct." See Defs.' Motions for Fees and Expenses, Appellant's Appx. at 25-26, 30-31, 32. The magistrate judge determined that sanctions were warranted and ordered Defendants to submit affidavits on their attorney fees to assist in calculating the proper amount of the sanction. See Order of February 28, 1997, at 2. Finding that Defendants' fee affidavits did not provide enough detail to justify higher awards, the magistrate judge ordered Lyons & Associates to pay each Defendant $15,000. See Order of March 18, 1998, at 5. The district court summarily affirmed the magistrate judge's decision, finding that it was neither clearly erroneous nor contrary to law. See Order of June 22, 1998, at 1. Lyons & Associates and Defendants appeal.
The District of Minnesota's local rules require parties to appeal a magistrate judge's decision to the district court within ten days. D.Minn.L.R. 72.1(b)(2). Defendants argue that Lyons & Associates waived the right to appeal the magistrate judge's February 1997 order awarding sanctions because it did not file an appeal until after the March 1998 order fixing the amount of sanctions.
In reviewing the magistrate judge's decision, the district court stated that Order of June 22, 1998, at 1. The court did not address Defendants' contention that Lyons & Associates waived its right to appeal the award of sanctions.
We have held that a district court order awarding sanctions is not final and appealable if it reserves the determination of the amount of the sanction. See Hill v. St. Louis Univ., 123 F.3d 1114, 1120-21 (8th Cir.1997); accord Kennedy v. Applause, Inc., 90 F.3d 1477, 1483 (9th Cir.1996); Travelers Ins. Co. v. St. Jude Hosp. of Kenner, La., Inc., 38 F.3d 1414, 1416 (5th Cir.1994); Discon, Inc. v. NYNEX Corp., 4 F.3d 130, 132-33 (2d Cir.1993); Walter v. Fiorenzo, 840 F.2d 427, 433 n. 6 (7th Cir.1988). But cf. Kansas Pub. Employees Retirement Sys. (KPERS) v. Reimer & Koger Assocs., 165 F.3d 627, 629-30 (8th Cir.1999) (). Because the magistrate judge's 1997 decision to award sanctions reserved the determination of the amount of the sanction, it was not appealable until entry of the March 1998 order fixing the amount of sanctions. Thus, Lyons & Associates did not waive its right to appeal the decision to award sanctions.
We review the district court's factual findings for clear error and its decision affirming the award of sanctions under section 1927 for an abuse of discretion. See KPERS, 165 F.3d at 630-31; Gundacker v. Unisys Corp., 151 F.3d 842, 849 (8th Cir.1998), cert. denied, --- U.S. ----, 119 S.Ct. 801, 142 L.Ed.2d 662 (1999); accord Aerotech, Inc. v. Estes, 110 F.3d 1523, 1528 (10th Cir.1997); Trulis v. Barton, 107 F.3d 685, 692 (9th Cir.1995); In re TCI Ltd., 769 F.2d 441, 448 (7th Cir.1985); see also O'Connell v. Champion Int'l Corp., 812 F.2d 393, 395 (8th Cir.1987) (); Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990) (). But see Perkins v. Spivey, 911 F.2d 22, 36 (8th Cir.1990) (). Although we will not substitute our judgment for the district court's, we must reverse if the court based its decision "on an erroneous view of the law or on a clearly erroneous assessment of the evidence." Cooter & Gell, 496 U.S. at 405, 110 S.Ct. 2447.
Section 1927 provides for sanctions against an attorney who "multiplies the proceedings in any case unreasonably and vexatiously." 28 U.S.C. § 1927. Courts have interpreted this statute to warrant sanctions when attorney conduct, " 'viewed objectively, manifests either intentional or reckless disregard of the attorney's duties to the court....
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