Lyons v. Lenders, 00-1240

• Decision Date: 18 October 2000
• Docket Number: No. 00-1240,00-1240
• Citation: 236 F.3d 443
• Parties: (8th Cir. 2001) Kenneth Ray Lee, et al., Plaintiffs, Thomas J. Lyons & Associates, Appellant, v. First Lenders Insurance Services, Inc., Defendant - Appellee. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 443

236 F.3d 443 (8th Cir. 2001)

Kenneth Ray Lee, et al., Plaintiffs, Thomas J. Lyons & Associates, Appellant, v. First Lenders Insurance Services, Inc., Defendant - Appellee.

No. 00-1240

United States Court of Appeals FOR THE EIGHTH CIRCUIT

Submitted: October 18, 2000

Filed: January 9, 2001

Appeal from the United States District Court for the District of Minnesota

Before McMILLIAN, BOWMAN, and LOKEN, Circuit Judges.

LOKEN, Circuit Judge.

Nine automobile purchasers filed this suit as a putative class action against numerous defendants in July 1994. The complaint alleged violations of the Minnesota Retail Installment Sales Act, the Minnesota usury laws, the federal Truth in Lending Act, and RICO; breaches of warranty; common law fraud; and illegal insurance sales. In August 1996, the district court granted summary judgment in favor of three defendants. Those defendants then moved for sanctions under 28 U.S.C. 1927. The district court awarded $15,000 to each defendant against plaintiffs' counsel, Thomas J. Lyons & Associates ("Lyons"). Lyons appealed, and we remanded because the district court's rulings did not provide "an adequate basis for reviewing the determination that sanctions were warranted." Lee v. L.B. Sales, Inc., 177 F.3d 714, 719 (8th Cir. 1999). On remand, two defendants settled the sanctions issue. The district court ¹ again imposed a $15,000 sanction in favor of the third defendant, First Lenders Insurance Services, Inc. ("First Lenders"), explaining the basis for its award under 1927. Lyons again appeals. We affirm.

The suit was initially filed by attorneys Thomas J. Lyons, Richard G. Nadler, and Steven T. Appelget. In January 1995, Lyons "parted company" with Nadler but did not withdraw as counsel for plaintiffs. In July 1995, Nadler filed a memorandum in support of plaintiffs' pending motion for class certification. In mid-September, Lyons and his new firm replaced Appelget and Nadler's law firm as counsel of record for the plaintiffs. Later that month, Lyons withdrew plaintiffs' motion to certify the class, advising the district court that he needed more time to file a third amended complaint, complete additional discovery, and reformulate the class certification motion with the help of new "national class counsel." The court extended the deadline for filing and arguing the class certification motion to March 1, 1996. Despite this extension, Lyons on behalf of plaintiffs never filed a third amended complaint and never moved to certify a class, effectively abandoning plaintiffs' class action allegations.

After the district court granted summary judgment in its favor, First Lenders moved for an award of $83,284.64 in costs and attorneys' fees under 1927, which provides that "[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." The magistrate judge concluded that sanctions were warranted but that First Lenders had failed to specify with sufficient detail the excess costs resulting from Lyons's unreasonable and vexatious conduct. Accordingly, the magistrate judge ordered Lyons to pay First Lenders $15,000. The district court summarily affirmed.On remand from this court, the magistrate judge held a status conference, took the matter under advisement, and issued an order recommending that the court again impose a $15,000 sanction. The district court adopted that recommendation.

Sanctions are proper under 1927 "when attorney conduct, viewed objectively, manifests either intentional or reckless disregard of the attorney's duties to the court." Lee, 177 F.3d at 718 (quotation and citation omitted). We review the district court's factual findings for clear error and its decision to award sanctions for an abuse of discretion. We give substantial deference to the district court's ultimate determination because of that court's "intimate familiarity with the case, parties, and counsel."O'Connell v. Champion Int'l Corp., 812 F.2d 393, 395 (8th Cir. 1987).

On remand, the district court articulated three bases for imposing sanctions under 1927, but we need discuss only one, the court's finding that Lyons, by the "filing of a class action complaint, and permitting the action to proceed with discovery and motion practice for over a year and a half, before abandoning the class claims without explanation, unreasonably and vexatiously multiplied the...