Van Eps v. Johnston, 87-448

• Decision Date: 26 August 1988
• Docket Number: No. 87-448,87-448
• Citation: 553 A.2d 1089,150 Vt. 324
• Parties: James R. VAN EPS and Tami L. Van Eps v. Fletcher A. JOHNSTON, Lawrence M. Johnston, Robert J. Johnston and Ronald O. Johnston and Ralph Perry.
• Court: Vermont Supreme Court

Page 1089

553 A.2d 1089

150 Vt. 324

James R. VAN EPS and Tami L. Van Eps v. Fletcher A. JOHNSTON, Lawrence M. Johnston, Robert J.

Johnston and Ronald O. Johnston and Ralph Perry.

No. 87-448.

Supreme Court of Vermont.

Aug. 26, 1988.

Sullivan, Sullivan & Enzor, Rutland, for plaintiffs-appellants.

Timothy N. Maikoff, Rutland, for defendants-appellees Johnston.

Ellen W. Burgess of Ryan Smith & Carbine, Ltd., Rutland, for defendant-appellee Perry.

Before ALLEN, C.J., PECK and DOOLEY, JJ., and SPRINGER, D.J. (Ret.), Specially Assigned.

ALLEN, Chief Judge.

This is an appeal from the order of the Rutland Superior Court dated September 21, 1987, denying a motion by plaintiffs' counsel to strike the sanctions imposed on him by that court. We reverse and remand for a hearing on the sanctions.

The underlying dispute involves a claim against defendants for misrepresentation of the quality of the water supply at the home purchased by the plaintiffs. The case was scheduled for trial on July 1, 1987. Plaintiffs' counsel arrived at the courthouse on the scheduled date without his clients, having told them that the case would settle and they need not appear. At a conference held in chambers immediately before trial was to begin, counsel for the parties disagreed as to whether the case was settled, and the attorney for the plaintiffs moved to continue because of the absence of his clients. The trial court, after reviewing the history of the negotiations between the parties, ordered entry of judgment for the plaintiffs pursuant to the settlement agreement the court concluded the parties had reached. The court went on to impose sanctions in the amount of $2,000 in attorney's fees and witness's expenses, for the cost to the defendants of preparing for and attending trial, to be paid by plaintiffs' attorney personally.

Plaintiffs filed a motion to strike the sanctions, or, in the alternative, to set aside the entire judgment, on the ground that the trial court lacked authority to impose the sanctions. The court denied the motion, stating that the motion was predicated on the false belief that plaintiffs themselves were liable for the sanctions due defendants. The court made it clear that the sanctions were against the attorney personally, for having "negotiated in bad faith," and were not to be paid by plaintiffs. It granted leave to renew the motion, "in the proper manner."

The motion was renewed and the trial court denied it, stating that plaintiffs' attorney "was sanctioned because he was not prepared to go to trial on July 1, 1987, not because of what transpired on June 30th [when he attempted to reach counsel for defendant-Perry to settle the case]." It is from this order, denying plaintiffs' motion to strike the sanctions, set aside the judgment or dismiss the case without prejudice, that this appeal is taken.

The imposition of sanctions is appealed on the grounds that (1) the trial court had no legal authority to impose sanctions in the form of attorney's fees in the absence of a statute or contract; (2) even if the court had authority, it erred by failing to conduct hearings and make findings of fact and conclusions of law regarding the reasonableness of the amount of attorney's fees; and (3) plaintiffs' attorney made good faith efforts to settle the case before trial.

Courts have inherent power to discipline the attorneys who practice before them. "The Court's inherent power of discipline is not derived from the Constitution, or, necessarily, from the statutes of the State. It has existed from time immemorial." In re Haddad, 106 Vt. 322, 325-26, 173 A. 103, 105 (1934) (citations omitted). Thus, this Court has the power to disbar an attorney admitted to practice before it. Id. The inherent power of discipline exists in the trial courts as well, albeit their powers are less than those of this Court.

While the general rule in federal courts is that litigants bear their own costs for attorney's fees, federal trial courts have the inherent power to assess attorney's fees against counsel for the willful disobedience of a court order as well as for acting in bad faith. Roadway Express, Inc. v. Piper, 447 U.S. 752, 765-66, 100 S.Ct. 2455, 2463-64, 65 L.Ed.2d 488 (1980). This federal "bad faith exception" for awarding attorney's fees as sanctions against counsel applies both to the filing and the conduct of litigation. Id. at 766, 100 S.Ct. at 2464.

Likewise, several state courts have held that trial courts have the inherent power to impose sanctions in the form of attorney's fees against counsel for misconduct. The Supreme Judicial Court of Maine has held that its promulgation of rules for attorney discipline does not deprive trial courts "of their inherent power to take other appropriate actions in a case before them to protect the integrity of the judicial system." State v. Grant, 487 A.2d 627, 629 (Me.1985); see also Eberly v. Eberly, 489 A.2d 433, 449 (Del.1985) ("A court has the inherent power to assess attorney's fees against counsel when that lawyer has acted in bad faith or wilfully abused the judicial process." (citation omitted)); Charles v. Charles, 505 A.2d 462, 467 (D.C.1986) (trial court has inherent power to assess attorney's fees against counsel for repeatedly ignoring court orders to answer the complaint); Coburn v. Domanosky, 257 Pa.Super. 474, 480-81, 390 A.2d 1335, 1338 (1978) (trial court could assess expenses against counsel whose delay in scheduling proceeding resulted in prejudice to other party, under its inherent power to conduct business in orderly manner).

We agree that trial courts have the inherent power to assess expenses against an attorney in the form of consequential damages suffered by the opposing side, such as attorney's fees and witness's expenses, incurred due to the attorney's abuse of the judicial process. Abuse of the judicial process includes acting in bad faith, Roadway Express, 447 U.S. at 766, 100 S.Ct. at 2464, ignoring court orders, Charles, 505 A.2d at 467, and scheduling delays causing prejudice to the opposing party, Coburn, 257 Pa.Super. at 480-81, 390 A.2d at 1338.

We concur with the following observations by the United States Supreme Court with respect to some lawyers:

Due to sloth, inattention, or desire to seize tactical advantage, lawyers have long indulged in dilatory practices. A number of factors legitimately may lengthen a lawsuit, and the parties themselves may...