Matta v. May

• Decision Date: 31 July 1997
• Docket Number: No. 96-20418,96-20418
• Citation: 118 F.3d 410
• Parties: 71 Empl. Prac. Dec. P 44,941, 38 Fed.R.Serv.3d 320, 25 Media L. Rep. 2398 Joseph Charles MATTA, Plaintiff-Appellant, v. S. Beville MAY, et al., Defendants, S. Beville May, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 410

118 F.3d 410

71 Empl. Prac. Dec. P 44,941, 38 Fed.R.Serv.3d 320,

25 Media L. Rep. 2398

Joseph Charles MATTA, Plaintiff-Appellant, v. S. Beville MAY, et al., Defendants S. Beville May, Defendant-Appellee.

No. 96-20418.

United States Court of Appeals Fifth Circuit.

July 31, 1997.

Matt E. Rubin, Williams, Birnberg & Andersen, Houston, TX, for Plaintiff-Appellant.

Thomas Joseph Forestier, S. Jack Balagia, Jr., McGinnis, Lochridge & Kilgore, Houston, TX, for Defendant-Appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before DAVIS, STEWART and PARKER, Circuit Judges.

ROBERT M. PARKER, Circuit Judge:

Appellant Joseph Charles Matta ("Matta") appeals from the an order awarding Appellee S. Beville May ("May") $290,262 in attorney fees as a sanction against Matta. We reverse.

FACTS AND PROCEEDINGS BELOW

This action and the related case of Barnes v. Levitt, No. H-92-898, arose from Wanderlon Ann Barnes's ("Barnes") employment at the Houston branch office of the Securities and Exchange Commission ("SEC"). Matta supervised Barnes in his capacity as the assistant regional administrator of the SEC. May was the attorney representing Barnes in connection with Barnes's claims of employment discrimination against SEC.

Barnes, an African-American female, worked as an SEC attorney in its Houston office from August 1988 until September 1991. In February 1991 Barnes sought counseling with the SEC's Office of Equal Employment Opportunity ("EEO"). During the initial informal proceedings Barnes raised issues of racial discrimination. Barnes claims, but Matta disputes, that Barnes also alleged gender discrimination and sexual harassment during the informal EEO process. On August 9, 1991 Barnes received a notification of her right to file a formal administrative EEO complaint. Barnes's attorney, May, filed a formal EEO complaint on August 23, 1991 and an amended complaint on September 3, 1991, alleging racially and sexually motivated discrimination, harassment and retaliation. Barnes did not sign either complaint. On Monday, September 9, 1991, Barnes started another federal job as an attorney at the Resolution Trust Corporation ("RTC") earning the same salary she was previously making at the SEC. On that date, she told the SEC that it should consider her constructively discharged as of September 6, 1991.

The SEC had issued a press release concerning the agency's investigation of Barnes's claims against Matta and other SEC officials. A reporter from the Houston Chronicle contacted Barnes's attorney, May, who granted a telephone interview. On September 7, 1991, a front-page newspaper article appeared in the Houston Chronicle which quoted May as stating that "an Equal Employment Opportunity complaint filed August 27 [on behalf of Barnes] claims Matta sexually assaulted a female employee" and "that Matta overlooked rapes by other men in the six-person [Houston] office." In fact, both as early as 1986, other senior officials at the HBO [Houston Branch Office] including former regional administrator Edwin J. Tomko, created a hostile and offensive environment for women by their conduct. Their conduct includes rape, sexual assault, sexually suggestive mannerisms, leering, dirty and racist jokes.

the complaint and the amended complaint alleged that

Although Barnes's complaint made various allegations against Matta, and did accuse other persons of sexual assault, it did not accuse Matta of sexual assault or overlooking rapes by other men. The statement attributed to May in the newspaper article was patently untrue.

After the SEC canceled her EEOC complaint for failure to cooperate, Barnes filed a Title VII and Equal Pay Act action on March 23, 1992. ¹ On September 4, 1992, Matta filed suit in a Texas state court asserting claims for defamation and false light publicity against May, Barnes and six media entities seeking damages allegedly resulting from the publication of the article. The defendants removed the defamation suit and sought to consolidate it with the Title VII suit. Although briefly consolidated, the defamation case was eventually severed and carried on the district court's docket as a separate action. On March 31, 1995, the district court granted summary judgment for the media entities, dismissed the claims against May and Barnes pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure and awarded $20,359.36 of costs against Matta.

After that summary judgment/dismissal order became final, May filed a motion for attorney's fees seeking $290,262.00 for services that her attorneys rendered to her in the defamation case as sanctions against Matta. She asserted that the fees were "recoverable and can be awarded under Rule 11, 28 U.S.C. § 1927 and through the exercise of the Court's inherent powers," but did not specify how those legal theories related to her claims. Matta filed a written response in opposition. The district court then granted the motion in a brief order, the body of which we reproduce here in its entirety:

Defendant S. Beville May's Motion for Attorney's Fees and Costs is before the Court. Having considered the motion and any responses thereto, the Court is of the opinion that S. Beville should have her attorney's fees in this case. It is therefore;

ORDERED, ADJUDGED AND DECREED that S. Beville May is awarded and shall recover $290,262.00 from and against Joseph C. Matta.

DISCUSSION

Matta challenges the award on appeal, contending that the attorney's fee, awarded in this case as a sanction, cannot be sustained under 28 U.S.C. § 1927, Rule 11 or the court's inherent powers. This Court reviews the imposition of sanctions for an abuse of discretion. Chaves v. M/V Medina Star, 47 F.3d 153, 156 (5th Cir.1995). A court abuses its discretion to impose sanctions when a ruling is based on an erroneous view of the law or on a clearly erroneous assessment of the evidence. Id.

Because it is impossible to tell what legal theory the district court based the award on, we will examine each in turn.

a. 28 U.S.C. § 1927.

Section 1927 applies to an "attorney or other person admitted to conduct cases in any court of the United States ... who so multiplies the proceedings in any case unreasonably and vexatiously...." 28 U.S.C. § 1927 (1994). Unlike Rule 11, § 1927 sanctions May argues that § 1927 may be applied to Matta "because he is an attorney and because he appeared pro se in an interlocutory appeal in the Barnes case, which had been consolidated with the defamation case," citing ACLI Gov't Sec., Inc. v. Rhoades, 907 F.Supp. 66 (S.D.N.Y.1995). Further, May points out that Matta did not raise this issue in the district court and argues that he is therefore foreclosed from raising it for the first time on appeal, citing Clark v. Aetna Casualty & Surety Co., 778 F.2d 242, 249 (5th Cir.1985). May contends that Matta's failure to make this argument in the trial court prevented that court from determining whether Matta acted as an offending attorney and not merely a client in this case.

are, by the section's plain terms, imposed only on offending attorneys; clients may not be ordered to pay such awards. Travelers Ins. Co. v. St. Jude Hospital, 38 F.3d 1414, 1416 (5th Cir.1994).

It is clear from the record that Matta was represented by an attorney throughout this case. Neither his status as a licensed attorney nor his pro se brief filed in the related case make him liable for attorney fees under § 1927. Therefore, § 1927 cannot serve as the basis of the $290,262 attorney fee award in this case.

b. Rule 11

Matta filed his original petition on September 4, 1992, prior to the amendment of Federal Rule of Civil Procedure 11, that was effective on December 1, 1993. The case was removed and Matta filed his motion to remand prior to the amendment as well. The case remained on the district court's docket until its dismissal on March 31, 1995. The court did not identify, the parties do not assert and we cannot find any action taken by Matta after the December 1, 1993 amendment that might serve as the predicate for the sanctions imposed. We therefore apply the pre-1993 version of Rule 11. Childs v. State Farm Mut. Auto. Ins. Co., 29 F.3d 1018, 1023 n. 17 (5th Cir.1994)(holding that because conduct at issue occurred prior to December 1, 1993, amended Rule 11 was not applied) The former version of Rule 11 provides in pertinent part:

The signature of an attorney or party constitutes a certificate by the signer that ... to the best of the signer's knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

. . . . .

If a pleading, motion, or other paper is signed in violation of this rule, the court upon motion or upon it own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney's fee.

Before a court can impose a Rule 11 sanction, "[i]t is axiomatic that the court must announce the sanctionable conduct giving rise to its order." Topalian v. Ehrman, 3 F.3d 931 (5th Cir.1993). As an initial matter, the sanctions imposed here are infirm because the record is devoid of any explanation from the district court in this regard. Moreover, Matta argues that the record cannot support a Rule 11 sanction on any factual theory and thus urges us to reverse the sanction award rather than remanding the case to the trial court to supply the necessary factual findings.

Matta asserts that the causes of action, filed in Texas ...