Ewing v. Readdick et al

Filing 59

ORDER denying 56 Motion for Attorney Fees. Signed by Judge William Q. Hayes on 4/24/2019. (sjm)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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ANTON EWING,

Case No.: 18-cv-0429-WQH-LL
Plaintiff,

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v.

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ORDER

DANIEL KLEIN,
Defendant.

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HAYES, Judge:

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The matter before the Court is the Motion for Attorneys’ Fees and Costs filed by
Defendant Daniel Klein. (ECF No. 56).

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I.

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Background
On February 26, 2018, Plaintiff filed the Complaint alleging claims under numerous

statutes, including RICO, 18 U.S.C. § 1964, against Defendant Daniel Klein. On August
14, 2018, the Court dismissed the Complaint without prejudice. (ECF No. 47). On August
30, 2018, Plaintiff filed a Motion for Leave to Amend. On January 8, 2019, the Court
denied leave to amend and dismissed the action with prejudice. (ECF No. 54). On January
14, 2019, Defendant filed a Motion for Attorney’s Fees. (ECF No. 56). On January 28,
2019, Plaintiff filed Opposition. (ECF No. 57). On January 28, 2019, Defendant filed a
Reply. (ECF No. 58).
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18-cv-0429-WQH-LL

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II.

Contentions

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Defendant contends that Plaintiff filed this action in bad faith and “unreasonably and

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vexatiously multiplied the proceedings in this action[.]” (ECF No. 56 at 4). Defendant

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contends Defendant is entitled to an award of attorneys’ fees pursuant to 28 U.S.C. § 1927

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and the Court’s inherent authority.

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Plaintiff contends that “[t]here was nothing willful, intentional or malicious about

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the filing of the motion for leave to file an FAC.” (ECF No. 57 at 7). Plaintiff asserts

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that “[t]he cause of action should have been as civil extortion via Superior Court filing,

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not federal” and Plaintiff “humbly apologizes to the Court for taking up the Court’s

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valuable time on this case with respect to Klein.” Id.
III.

Legal Standard

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Under Section 1927, “[a]ny attorney or other person admitted to conduct cases in

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any court of the United States . . . who so multiplies the proceedings in any case

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unreasonably and vexatiously may be required by the court to satisfy personally the excess

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costs, expenses, and attorneys' fees reasonably incurred because of such conduct.” 28

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U.S.C. § 1927. Section 1927 is not applicable to the initial pleading. In re Keegan Mgmt.

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Co., Sec. Litig., 78 F.3d 431, 435 (9th Cir. 1996) (“We have twice expressly held that §

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1927 cannot be applied to an initial pleading.”). “Sanctions pursuant to section 1927 must

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be supported by a finding of subjective bad faith.” New Alaska Dev. Corp. v. Guetschow,

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869 F.2d 1298, 1306 (9th Cir. 1989). “Bad faith is present when an attorney knowingly or

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recklessly raises a frivolous argument or argues a meritorious claim for the purpose of

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harassing an opponent.” Id.

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Under the Court’s inherent authority, fee-based sanctions may be imposed “when a

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party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons, delaying or

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disrupting litigation, or has taken actions in the litigation for an improper purpose.” Fink

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v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001) (citing Chambers v. NASCO, Inc., 501 U.S.

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32, 45–46 (1991). “[M]ere recklessness, without more, does not justify sanctions under a

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court's inherent power.” Id. at 993–94. “[C]ounsel's conduct must “constitute[ ] or [be]
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18-cv-0429-WQH-LL

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tantamount to bad faith.” In re Keegan Mgmt. Co., Sec. Litig., 78 F.3d at 436 (quoting

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

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IV.

Ruling of the Court

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Section 1927 sanctions are not applicable to the original complaint, see In re Keegan

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Mgmt. Co., Sec. Litig., 78 F.3d at 435, and Plaintiff was denied leave to file an amended

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complaint. Plaintiff filed a number of motions during the relatively short pendency of this

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action, but the Court does not find that Defendant has presented sufficient evidence that

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subsequent motions were filed in subjective bad faith. See New Alaska Dev. Corp., 869

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F.2d at 1306 (“Sanctions pursuant to section 1927 must be supported by a finding of

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subjective bad faith.”). The Court declines to impose sanctions under Section 1927.

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The Court dismissed Plaintiff’s original complaint without prejudice because

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Plaintiff had not alleged sufficient facts to support a finding that Defendant’s racketeering

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activity caused him a concrete financial loss. (ECF No. 47 at 5). After reviewing Plaintiff’s

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proposed amended complaint, the Court denied leave to amend and dismissed with

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prejudice because Plaintiff failed to allege a plausible theory of causation or provide

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sufficient facts establishing a concrete financial loss. (ECF No. 54 at 6). The Court did

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not make a finding that Plaintiff filed the action in bad faith or acted in a way tantamount

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to bad faith. See In re Keegan Mgmt. Co., Sec. Litig., 78 F.3d at 436. The Court declines

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to award attorneys’ fees under its inherent authority. See United States v. Rico, 619 F.

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App'x 595, 601 (9th Cir. 2015) (“sanctions should be reserved for the ‘rare and exceptional

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case’”); Cf. Blixseth v. Yellowstone Mountain Club, LLC, 796 F.3d 1004, 1008 (9th Cir.

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2015) (exercising the court’s discretion not to sanction a party who filed a frivolous appeal

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under Fed. R. App. P. 38 and noting that “a finding of frivolousness does not automatically

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result in sanctions”).

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18-cv-0429-WQH-LL

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V.

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The Motion for Attorneys’ Fees and Costs filed by Defendant Daniel Klein (ECF No.

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Conclusion

56) is DENIED.
Dated: April 24, 2019

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