Phillips v. IMS Loans, Inc.

Filing 35

MEMORANDUM AND ORDER signed by Judge Frank C. Damrell, Jr on 10/8/2010 GRANTING 22 defendant's motion for sanctions in the form of attorneys' fees and costs against Stephen Collette in the amount of $9,371.50. (Krueger, M)

Phillips v. IMS Loans, Inc.

Doc. 35

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Wachovia Mortgage is erroneously named in this action as "Wells Fargo Bank as successor by acquisition to Wachovia Bank and World Savings Bank." 1
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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA ----oo0oo---DONNA L. PHILLIPS, Plaintiff, v. IMS LOANS, INC., a California corporation, WELLS FARGO BANK, as successor by acquisition to Wachovia Bank and World Savings Bank, a California corporation; and DOES 1 through 10, inclusive, Defendants. ----oo0oo---This matter is before the court on defendant Wachovia Mortgage, a division of Wells Fargo Bank's1 ("defendant") motion for sanctions in the amount of attorneys' fees and costs against plaintiff Donna L. Phillips' ("plaintiff") former counsel, Stephen P. Collette ("Collette"). The court directed Collette to NO. CIV. S-09-3112 FCD/EFB MEMORANDUM AND ORDER

Dockets.Justia.com

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appear at the hearing on October 8, 2010, but he failed to do so. For the reasons set forth below, defendant's motion for sanctions is GRANTED. BACKGROUND Defendant originally removed this case to this court on November 6, 2009. Subsequently, on November 13, 2009, it moved (Docket #6.) Plaintiff failed to respond

to dismiss the case.

to the motion, and the court issued an OSC to plaintiff's counsel on February 1, 2010. (Docket #9.) Again, plaintiff failed to

respond, and on March 29, 2010, the court issued an order sanctioning counsel $150.00. The court also issued a further OSC

to plaintiff's counsel regarding the imposition of additional monetary sanctions, and dismissal of the case for failure to prosecute. (Docket #10.) Counsel did not respond, and the court

issued its May 11, 2010 Order dismissing the case and imposing sanctions on counsel in the amount of $450.00. (Docket #11.)

Counsel did not timely pay the sanctions, and on June 4, 2010, the court set the matter for hearing on July 23, 2010. #14.) Counsel additionally did not respond to defendant's motion for attorneys' fees, which sought an award of $7,907.50 against plaintiff, personally, pursuant to the terms of the Promissory Note and Deed of Trust plaintiff executed with defendant. (Docket #18.) As a result of counsel's failure to respond to (Docket

that motion, the court issued another OSC on June 28, 2010 (Docket #20), setting the matter for hearing on July 23, 2010. Again, plaintiff's counsel did not respond to the OSC pertaining to defendant's attorneys' fees motion. 2

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Because of plaintiff's counsel's continued failure to comply with the court's orders, the court reviewed counsel's state bar records. On April 9, 2010, a Notice of Disciplinary Charges was

issued to counsel by the State Bar of California, charging counsel with 29 offenses, including: failure to maintain client funds in a trust account, moral turpitude, misappropriation of funds, failure to cooperate in State Bar investigations, formation of a partnership with a non-lawyer, failure to refund unearned fees, sharing legal fees with a non-lawyer, unauthorized practice of law in another jurisdiction, and failure to perform with competence. (In the Matter of: Stephen Paul Collette, No.

186439, Case Nos. 09-O-10385, 09-O-12389, 09-O-12430, 09-O-12656, 09-O-13415, 09-O-13532, 09-O-14457.) Counsel failed to respond to the charges, and on June 21, 2010, the State Bar Court issued an order, entering default against counsel. The order deemed the factual allegations of the

charges admitted, and suspended counsel from the practice of law. (In the Matter of Stephen P. Collette, Member No. 186439, Case No. 09-O-10385-RAH.) His suspension remains in effect until

counsel requests, and the Bar Court grants, a motion for termination of actual suspension. ineligible to practice law. (Id.) Until then, counsel remains

Due to Collette's ineligible status, the court vacated the sanction orders against him on July 15, 2010. Noting that

plaintiff may not have been aware of the status of her counsel or the pending motion against her, the court directed defendant to personally serve plaintiff with its motion for attorneys' fees. On September 24, 2010 plaintiff filed an opposition to 3

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defendant's motion stating that she did not provide authorization for Collette to file this lawsuit, and, in fact, was unaware of the lawsuit until she was personally served in August of 2010. Subsequently, defendant replied, stating that they would withdraw their motion for attorneys' fees against plaintiff personally, if the fee award were imposed against Collette. ANALYSIS A. Imposition of Sanctions Section 1927 allows the court to award fees against "any attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously." 28 U.S.C. § 1927. This section

is not specific to any statute, but applies to any civil suit in federal court. Hyde v. Midland Credit Mgmt., Inc., 567 F.3d Further, the statute "explicitly Id.; F.T.C.

1137, 1141 (9th Cir. 2009).

provides for remedies against offending attorneys."

v. Alaska Land Leasing, Inc., 799 F.2d 507, 510 (9th Cir. 1986). The court also has the inherent power to issue sanctions in order "to protect the due and orderly administration of justice and maintain the authority and dignity of the court." Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997) (internal quotations and citation omitted). These

sanctions may be issued when the party has acted "in bad faith, vexatiously, wantonly, or for oppressive reasons" and may take the form of attorneys' fees. Id. Before awarding such sanctions

however, "the court must make an explicit finding that counsel's conduct `constituted or was tantamount to bad faith.'" Id.

(quoting Roadway Express, Inc. v. Piper, 447 U.S. 752, 767 (1980)). 4

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Collette's actions as detailed above, including filing a lawsuit on behalf of a plaintiff without plaintiff's knowledge or authorization, abandoning a client, and abandoning a lawsuit, constitute bad faith. Further, the judicial resources that the

court was forced to expend in an effort to get Collette to respond to defendant's motions and multiple OSCs warrants the imposition of sanctions. Therefore, in the interest of

protecting the due and orderly administration of justice, the court imposes sanctions against Collette in the form of attorneys' fees and costs, pursuant to both § 1927 and the court's inherent power to issue sanctions.2 B. Amount of Sanctions 1. Reasonable Hourly Rate

In order to determine what rate is "reasonable," courts look at "prevailing market rates in the relevant community." Stenson, 465 U.S. 886, 895 (1984); Davis v. City of San Francisco, 976 F.2d 1536, 1545 (9th Cir. 1992) (a reasonable hourly rate should be determined "by reference to the fees that private attorneys of an ability and reputation comparable to that of prevailing counsel charge their paying clients for legal work of similar complexity"). Determination of a reasonable hourly Blum v.

rate is not made merely by reference to rates actually charged by the prevailing party. Chalmers v. City of Los Angeles, 796 F.2d Rather, the rate assessed is based

1205, 1210 (9th Cir. 1986).

on the prevailing rate in the relevant community for similar In light of Collette's conduct, and the fact that plaintiff was an unwitting and unwilling participant in this lawsuit, defendant has agreed to withdraw its motion for attorneys' fees against plaintiff personally. 5
2

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work.

Id. at 1211; Blum, 465 U.S. at 895 n. 11.

Generally, the

relevant community is the forum in which the district court sits. Davis v. Mason County, 927 F.2d 1473, 1488 (9th Cir. 1991). In this case, defendant's counsel seeks the court's approval of a rate of: $320 per hour for Mark T. Flewelling, an attorney with 29 years of litigation experience; $300 per hour for Fred J. Hickman, an attorney who graduated 24 years ago; $250 per hour for Jeremy E. Shulman, an attorney with 8 years of litigation

experience; and $155 per hour for Dorothy Pandy, a paralegal. These figures reflect the prevailing rate for similar work in the relevant legal community of Sacramento in the Eastern District of California. 2. Therefore, the court approves these rates.

Reasonable Hours Expended

In determining the reasonable hours expended, the party seeking attorneys' fees bears the burden of submitting detailed time records which justify the hours spent working on the claims. Hensley v. Eckerhart, 461 U.S. 424, 434 (1983) (district court should exclude hours not "reasonably expended"). The court considers the amount of hours requested in this case reasonable, but reduces the hours slightly in light of the brief telephonic hearing on October 8, 2010. Thus, after

reducing counsel's hours from 1.5 to .5 for the October 8, 2010 hearing, the court determines that counsel is entitled to $9,371.50 in attorneys' fees and costs. CONCLUSION For the foregoing reasons, the court grants defendant's motion for sanctions in the form of attorneys' fees and costs against Stephen P. Collette in the amount of $9,371.50. 6

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7 FRANK C. DAMRELL, JR. UNITED STATES DISTRICT JUDGE IT IS SO ORDERED. DATED: October 8, 2010