Rohifard v. Brewer & Pritchard, P.C. (In re ABC Dentistry, P.A.)
| Decision Date | 08 February 2023 |
| Docket Number | 16-34221,Adversary 18-3205 |
| Court | U.S. Bankruptcy Court — Southern District of Texas |
| Parties | IN RE: ABC DENTISTRY, P.A., et al., Debtors. v. BREWER & PRICHARD, P.C., et al., Defendants. SAEED ROHIFARD, Plaintiff, |
Dr Saeed Rohi moved for sanctions against his former attorneys. Dr. Rohi alleges that they failed to promptly deliver his client file and knowingly pursued a bad faith defense against him. The failure to promptly deliver the entirety of Dr Rohi's client file warrants sanctions.
On June 4, 2018, Dr. Rohi filed suit against his former counsel Brewer & Pritchard, P.C., J. Mark Brewer, and A. Blaire Hickman (the "Brewer Defendants"), in Harris County, Texas for breach of fiduciary duty and breach of contract. (ECF No. 119 at 2). The Brewer Defendants moved to reopen ABC Dentistry, P.A.'s bankruptcy case and remove the malpractice litigation. (Case No. 16-34221, ECF No. 392). The Court reopened the case. (Case No. 16-34221, ECF No 396).
On July 17, 2018, Dr. Rohi requested the "entire original client file" from the Brewer Defendants, including "all emails, correspondence, pleadings, motions, reports, memorandums, discovery, or any other document that comprises of the client file maintained by Brewer & Pritchard." (ECF Nos. 119 at 3, 10; 119-1 at 8). The Brewer Defendants produced 790 physical pages and a flash drive with 1,032 files within 45 subfolders. (ECF No. 119 at 3-4). The Brewer Defendants did not turn over any emails. (ECF No. 119 at 4).
The Brewer Defendants moved to dismiss the malpractice litigation because it was barred by res judicata. (ECF No. 119 at 4). The Brewer Defendants argued that Dr. Rohi should have brought claims against them at the November 7, 2017 hearing because Dr. Rohi knew of the potential for claims against them. (ECF Nos. 2 at 16; 119 at 4). Dr. Rohi disagreed because he was not adverse to the Brewer Defendants during the November 7, 2017 hearing. (ECF Nos. 30 at 3; 119 at 4). The Court dismissed Dr. Rohi's claims. (ECF No. 119 at 5). Dr. Rohi appealed to the district court and the Fifth Circuit. (ECF No. 119 at 5).
The Fifth Circuit reversed and remanded. Rohi v. Brewer (In re ABC Dentistry), 978 F.3d 323 (5th Cir. 2020). As instructed by the Fifth Circuit, the Court granted Dr. Rohi's motion for leave to amend. Id. at 326. After Dr. Rohi filed the Second Amended Complaint, Mr. Brewer and Ms. Hickman testified that they never were adverse to him. (ECF Nos. 119 at 8, 26; 119-1 at 20; 119-2 at 8; 119-5 at 4-5).
Dr. Rohi seeks: (i) $3,150 for attorneys' fees in bringing the motion for sanctions; and (ii) $115,090 for attorneys' fees to defend against the res judicata claim in this Court and on appeal. (ECF No. 119 at 31).
The District Court is vested with original and exclusive jurisdiction for all cases under title 11 as well as original (but not exclusive jurisdiction) for cases arising under, arising in, or related to title 11. 28 U.S.C. §§ 1334(a), (b). The Court has continuous jurisdiction to interpret and enforce its own orders. Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009) (citing Local Loan Co. v. Hunt, 292 U.S. 234, 239 (1934)). The dispute in which this motion for sanctions sits ultimately concerns whether the Court's November 7, 2017 order dividing qui tam proceeds between Dr. Rohi, his counsel, and the state of Texas was procured by his counsel's fraud. (ECF No. 84).
Dr Rohi requested his client file, including any emails. (ECF No. 119 at 10). The Brewer Defendants did not send Dr. Rohi any emails under the theory that emails are not part of his client file. (ECF No. 119 at 10-11). Dr. Rohi alleges this was done in contravention of the Texas Disciplinary Rules of Professional Conduct and in bad faith. Dr. Rohi also alleges that the Brewer Defendants (i) pursued their res judicata claim in bad faith; or (ii) defended conflict allegations in bad faith. (ECF No. 119 at 8). Only the failure to promptly turn over emails warrants sanctions.
The "American Rule" generally prevents fee shifting, but federal courts may sanction parties who act in "bad faith, vexatiously, wantonly, or for oppressive reasons . . . ." Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991) (quoting Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-59 (1975)). The Court may impose sanctions under its inherent power following a finding of bad faith. See In re Correra, 589 B.R. 76, 125 (Bankr. N.D. Tex. 2018) ; Resolution Tr. Corp. v. Bright, 6 F.3d 336, 340 (5th Cir. 1993) ; Crowe v. Smith, 151 F.3d 217, 221 (5th Cir. 1998) ("[B]ad faith is a prerequisite to the exercise of a court's inherent power."). The Court faces a high threshold to use its inherent powers to sanction. Chaves v. M/V Medina Star, 47 F.3d 153, 156 (5th Cir. 1995) (citing Reed v. Iowa Marine and Repair Corp., 16 F.3d 82 (5th Cir. 1994)). Indeed, inherent powers should be exercised with restraint and discretion. Chambers, 501 U.S. at 44.
"There is no single litmus test for determining what constitutes bad faith, though more than mere negligence is required." Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 799 (7th Cir. 2013) (citing Maynard v. Nygren, 332 F.3d 462, 471 (7th Cir. 2003)). The Fifth Circuit has found that knowing misrepresentations may constitute bad faith:
First, and primarily, the district court found that all of the sanctions defendants willfully failed to disclose the D&O Policy to the Crowes despite having a known duty to reveal it. Second, the district court found that some of the attorney defendants engaged in affirmative misrepresentations or near misrepresentations in an attempt to keep the policy a secret. Clearly, either of these grounds would be sufficient to support a finding of bad faith conduct.
Crowe, 151 F.3d at 236-37. If the Court finds that sanctions are warranted against the Brewer Defendants for bad faith conduct, it may order them to pay the fees that "the innocent party incurred solely because of the misconduct-or put another way, to the fees that party would not have incurred but for the bad faith." Goodyear Tire & Rubber Co. v. Haeger, 581 U.S. 101, 104 (2017); see also Goldstein v. Bavelis (In re Bavelis), 743 Fed.Appx. 670, 677 (6th Cir. 2018) (affirming the bankruptcy court's application of Goodyear in part concerning the recovery of costs and fees associated with efforts to obtain sanctions, which "would not have been incurred but for the [Appellants'] misconduct.").
Dr. Rohi argues that communications (including emails) that the Brewer Defendants made while representing him are work product which belong in his client file, and he is entitled to his entire client file under the Texas Disciplinary Rules of Professional Conduct. (ECF No. 119 at 11).
The Brewer Defendants argue that emails were never part of Dr. Rohi's client file, so they did not turn any over notwithstanding that Dr. Rohi specifically requested emails. (ECF No. 163 at 32).
While not expressly applicable, federal courts may hold attorneys accountable to state codes of professional conduct. Bright, 6 F.3d at 341 ; Lake Eugenie Land & Dev., Inc. v. BP Expl. & Prod., Inc. (In re Deepwater Horizon), 824 F.3d 571, 577 (5th Cir. 2016). As Texas attorneys, the Court may hold the Brewer Defendants accountable to the Texas code of professional conduct.
The Texas Disciplinary Rules of Professional Conduct require an attorney to surrender papers and property to which the client is entitled. Tex. Disciplinary R. Pro. Conduct 1.15(d). ("Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as . . . surrendering papers and property to which the client is entitled . . . ."). In Texas, the client is entitled to the contents of the client's file, including work product. In re George, 28 S.W.3d 511, 516 (Tex. 2000) ()); Positive Software Sols., Inc. v. New Century Mortgage Corp., No. 3:03-CV-0257-N, 2008 WL 11347959, at *4 (N.D. Tex. Sept. 17, 2008) ; Resolution Tr. Corp. v. H----, P.C., 128 F.R.D. 647, 648 (N.D. Tex. 1989) (); In re McCann, 422 S.W.3d 701, 704 (Tex. Crim. App. 2013) ( ); see Tex. Comm. On Pro. Ethics Op. 570 ().
Rule 192.5 of the Texas Rules of Civil Procedure defines work product:
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