AOM Group, LLC, et al. v. Wachovia Mortgage, et al.

Filing 43

ORDER granting in part and denying in part 39 defendants' Motion for Sanctions and an award of attorneys' fees. We award attorneys' fees in the amount of $45,000.00 in favor of Wells Fargo Bank and Golden West Savings Association Service Company and against AOM Group, LLC. We deny the motion with respect to sanctions. Signed by Judge Frederick J Martone on 11/12/10.(TLJ)

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AOM Group, LLC, et al. v. Wachovia Mortgage, et al. Doc. 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WO NOT FOR PUBLICATION IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA AOM Group, LLC, Plaintiff, vs. Wachovia Mortgage, FSB, et al., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) No. CV-10-00545-PHX-FJM ORDER The court has before it defendants Wells Fargo Bank and Golden West Savings Association Service Company's motion for sanctions and an award of attorneys' fees (doc. 39). Plaintiff AOM Group failed to respond. I In 2007, Mahmood and Mary Tehrani executed a loan agreement with Wells Fargo Bank's predecessor in interest and secured it with a deed of trust on a home in Gilbert, Arizona. The Tehranis stopped making payments in 2009. At the time, plaintiff advertised its purported ability to assist homeowners facing foreclosure. Motion, ex. F. On behalf of the Tehranis, plaintiff recorded apparently fraudulent documents, created a trust, and executed assignments between plaintiff and the Tehranis in an effort to frustrate a trustee's sale of the home. Id., ex. E. On its own behalf, plaintiff then alleged a series of federal and state claims related to the loan and the deed of trust against defendants. After defendants Dockets.Justia.com 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 removed this action from state court, we denied plaintiff's motion for a preliminary injunction and temporary restraining order and advised plaintiff's counsel to consider the implications of pursuing the claims involved (doc. 17). Plaintiff then filed an amended complaint and unsuccessfully attempted to `remove' this action to bankruptcy court (doc. 30). In our Order of August 12, 2010, we granted defendants' motion to dismiss plaintiff's claims, most of which plaintiff had abandoned in its response (doc. 36). We note that this court has dismissed over a dozen similar actions filed by plaintiff. See AOM Grp., LLC v. Wells Fargo Bank, No. CV-10-528-MHM, 2010 WL 3342005, at *1 n.1 (D. Ariz. Aug. 25, 2010) (collecting cases). II Defendants move for an award of reasonable attorneys' fees as "the successful party" in a "contested action arising out of a contract." A.R.S. 12-341.01(A). In exercising our discretion to award fees under 12-341.01(A), we consider (1) whether the unsuccessful party's claims or defenses were meritorious; (2) whether the litigation could have been avoided or settled; (3) whether assessing fees would cause extreme hardship; (4) whether the successful party prevailed in all respects; (5) whether the legal questions were novel; and (6) whether an award would discourage other parties from litigating tenable claims or defenses. Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d 1181, 1184 (1985). In addition, because plaintiff failed to respond to defendants' motion, we may grant it summarily. LRCiv 7.2(i) (permitting non-compliance with briefing requirements to be deemed consent to the granting of a motion). The Associated Indemnity factors favor an award of attorneys' fees. Plaintiff's claims lacked merit. Defendants reasonably rejected plaintiff's settlement offer to dismiss its claims in May 2010 without any reimbursement of attorneys' fees. We cannot determine whether an assessment of fees would be a hardship to plaintiff because it failed to respond, but we note that it is not a distressed homeowner. Defendants prevailed on all claims, none of which presented novel legal issues. Finally, given the nature of plaintiff's claims, an award of fees would not discourage parties with tenable claims. Therefore, we conclude that an award of -2- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 reasonable attorneys' fees is appropriate. Defendants seek $67,928.70 in fees for 170 hours of attorney time. The number of hours worked is high considering the lack of merit to plaintiff's claims. Defendants represent that about 75 hours of attorney time were spent in connection with plaintiff's questionable attempt to remove this action to bankruptcy court. They also contend that plaintiff's use of suspect recorded documents and a trust arrangement sets this action apart from typical foreclosure actions involving unsophisticated parties. We agree that this action was more complex than a typical foreclosure action. Moreover, we note that plaintiff declined its opportunity to challenge the reasonableness of defendants' attorneys' fees by failing to respond. Nevertheless, we also agree with defendants' assessment that plaintiff's claims required "only a perfunctory review of the applicable law." Motion at 6. An award of attorneys' fees under 12-341.01(A) "should be made to mitigate the burden of the expense of litigation to establish a just claim or a just defense." A.R.S. 12-341.01(B). "It need not equal or relate to the attorney fees actually paid or contracted." Id. Based on the merits of plaintiff's claims, we conclude that an award of attorneys' fees in the reduced amount of $45,000.00 is sufficient to mitigate defendants' burden. III Defendants also move for sanctions against plaintiff and plaintiff's counsel pursuant to Rule 11, Fed. R. Civ. P., 28 U.S.C. 1927, and this court's inherent authority. Defendants assert that plaintiff's counsel violated Rule 11 by presenting claims through pleadings without performing a reasonable inquiry into their factual support. See Rule 11(b), Fed. R. Civ. P. Defendants do not mention the safe harbor and separate motion requirements for a motion under Rule 11(c)(2), Fed. R. Civ. P., presumably because they have not been met. Instead, they rely on Rule 11(c)(3), Fed. R. Civ. P., which permits sanctions on the court's initiative after an order to show cause. With respect to 28 U.S.C. 1927, defendants assert that plaintiff's counsel "unreasonably and vexatiously" multiplied these proceedings by attempting to remove this action to bankruptcy court in bad faith. 28 U.S.C. 1927 (extending personal liability to a party's counsel for excessive costs incurred because of -3- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 misconduct). Finally, defendants invoke our inherent authority to sanction conduct in bad faith. See B.K.B. v. Maui Police Dep't, 276 F.3d 1091, 1107 (9th Cir. 2002). In our Order of August 12, 2010, we admonished plaintiff's counsel to review his obligations under Rule 11, Fed. R. Civ. P., and this court's Standards of Professional Conduct (doc. 36). We agree with defendants that the conduct of plaintiff and plaintiff's counsel in connection with this action was troublesome. Because defendants are otherwise receiving an award of reasonable attorneys' fees which reflects the consequences of this conduct, however, we conclude that sanctions are unnecessary. IT IS THEREFORE ORDERED GRANTING IN PART and DENYING IN PART defendants' motion for sanctions and an award of attorneys' fees (doc. 39). We award attorneys' fees in the amount of $45,000.00 in favor of Wells Fargo Bank and Golden West Savings Association Service Company and against AOM Group, LLC. We deny the motion with respect to sanctions. DATED this 12th day of November, 2010. -4-

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