Justice v. Gemini Capital Group, LLC

Filing 22

ORDER denying 14 Motion for Attorney Fees. By Judge William J. Martinez on 5/8/2015.(alowe)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 14-cv-2590-WJM-KLM
KENNETH JUSTICE,
Plaintiff,
v.
GEMINI CAPITAL GROUP, LLC,
Defendant.

ORDER DENYING MOTION FOR ATTORNEYS’ FEES

This lawsuit between Kenneth Justice (“Justice”) and Gemini Capital Group, LLC
(“Gemini”) was voluntarily dismissed by Justice on November 13, 2014. (ECF No. 12.)
Before the Court is Gemini’s Motion for Attorneys’ Fees. (ECF No. 14.) For the
reasons stated below, Gemini’s motion is denied.
I. BACKGROUND
About a year ago, Gemini filed a debt-collection lawsuit in El Paso County Court
against Justice (“County Court Action”). (ECF No. 14-1 ¶ 4.) Representing himself,
Justice answered Gemini’s complaint with, among other things, a statute of limitations
defense and an accusation that Gemini was violating the Fair Debt Collection Practices
Act (“FDCPA”). (ECF No. 14-2 at 3–6.) On September 2, 2013, Gemini and Justice
agreed to dismiss the entire County Court Action with prejudice. (ECF No. 14-1 ¶ 7.)
On September 11, 2014, judgment was entered in the County Court Action, dismissing
the case with prejudice and noting that “the parties have elected to release each other

of all claims concerning the matters which each of them have pled or could have pled in
the within action.” (ECF No. 14-2 at 11–12.)
One week later, Justice filed this action. (ECF No. 1.) Justice, now represented
by counsel, alleged that Gemini had been harassing and abusive in its debt collection
practices because it filed the County Court Action against him while knowing that the
statute of limitations on his debt had supposedly expired. (Id. ¶¶ 9–10.)
On October 28, 2014, counsel for Gemini sent an e-mail to counsel for Justice,
stating as follows: “This file has been assigned to us by Gemini Capital. Attached is our
analysis of the case and demand for dismissal. If you do not intend to dismiss the
lawsuit, will you please let me know if you will stipulate to a 10-day extension of our
October 31 response date, to November 10? I look forward to hearing from you.” (ECF
No. 17-2 at 2.) The referenced attachment was a letter describing the County Court
Action, attaching the relevant pleadings from that action, and threatening sanctions
under Federal Rule of Civil Procedure 11 if the complaint was not withdrawn, given that
this lawsuit was precluded by the County Court judgment (“October 28 Letter”). (ECF
No. 17-3.) Gemini’s counsel stated that it was “inclined to give you [Justice’s counsel]
the benefit of the doubt” because “Mr. Justice was mailed a copy of the state court
dismissal order on October 3, 2014 . . . and it is possible that y ou were not made aware
of the settlement and dismissal by the time you filed your complaint on September 18,
2014.” (Id. at 3.)
Justice’s counsel replied the next day as follows: “I will review this and get back
to you. In the meantime, the extension is fine.” (ECF No. 17-4 at 2.) Justice’s counsel
then “reached out to [her] client . . . both personally and with staff assistance on several
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occasions.” (ECF No. 17-1 ¶ 5.) She “made contact with Mr. Justice on November 13,
2014.” (Id. ¶ 6.) Three days earlier, however, Gemini had filed a motion to dismiss.
(ECF No. 10.) Nonetheless, on the same day that Justice’s counsel made contact with
Justice (November 13), Justice voluntarily withdrew his complaint and dismissed this
action. (ECF No. 12.)
II. ANALYSIS
Gemini now moves for its attorneys fees under 28 U.S.C. § 1927, which provides
that “[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably
and vexatiously may be required by the court to satisfy personally the excess costs,
expenses, and attorneys’ fees reasonably incurred because of such conduct.” Gemini
argues that Justice’s counsel’s failure to withdraw the complaint soon after receiving the
October 28 Letter was an unreasonable multiplication of proceedings, forcing Gemini to
file its motion to dismiss. (ECF No. 14 at 1–2.) Gemini requests about $3,500 in
attorneys’ fees as a sanction. (Id. at 5.)
Whether to award § 1927 sanctions is a matter committed to this Court’s
discretion, Dominion Video Satellite, Inc. v. Echostar Satellite L.L.C., 430 F.3d 1269,
1278–79 (10th Cir. 2005), but § 1927 awards are appropriate “only in instances
evidencing a serious and standard disregard for the orderly process of justice,” White v.
Am. Airlines, Inc., 915 F.2d 1414, 1427 (10th Cir. 1990) (interna l quotation marks
omitted). “Actions are considered vexatious and unreasonable if the attorney acts in
bad faith . . . or if the attorney’s conduct constitutes a reckless disregard for the duty
owed by counsel to the court.” Shackelford v. Courtesy Ford, Inc., 96 F. Supp. 2d

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1140, 1144 (D. Colo. 2000).
Of particular relevance to this case, the Tenth Circuit has stated that the
statutory language in § 1927 “necessarily excludes [sanctions based on] the complaint
that gives birth to the proceedings, as it is not possible to multiply proceedings until
after those proceedings have begun.” Steinert v. Winn Group, Inc., 440 F.3d 1214,
1225 (10th Cir. 2006) (emphasis in original). Here, Gemini effectively seeks to hold
Justice accountable for an unsupportable complaint. Thus, Steinert would appear to
preclude § 1927 sanctions.
According to Gemini, however, two Tenth Circuit cases establish that “28 U.S.C.
§ 1927 applies to drafting motions to dismiss when counsel has multiplied proceedings
by attempting to re-litiga[t]e issues that were already litigated in a different forum.”
(ECF No. 18 at 4.) Gemini first cites Home Indemnity Co. v. Arapahoe Drilling Co.,
5 F.3d 546 (table), 1993 W L 336078 (10th Cir. Aug. 27, 1993). In Home Indemnity, the
plaintiff had filed an insurance-related complaint and then agreed with the defendant to
submit the dispute to the jurisdiction of the New Mexico Department of Insurance, at
which point the federal lawsuit was stayed. Id. at *1. The plaintiff lost in the
administrative forum, on appeal to a higher administrative tribunal, and on appeal to a
New Mexico state district court. Id. In the middle of an appeal to the New Mexico Court
of Appeals, the plaintiff moved for summary judgment in the federal district court on the
same theory rejected in the state proceedings. Id. The district court denied the motion
and awarded § 1927 sanctions. Id. at *2. The Tenth Circuit affirmed because, among
other things, “sanctions under [§] 1927 are appropriate when an attorney seeks to

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resurrect matters already concluded.” Id. at *3.
Home Indemnity does not fit the situation presented here. Justice’s counsel did
not represent Justice in the County Court Action. Justice’s counsel certainly should
have inquired of Justice more thoroughly regarding the outcome of the County Court
Action, but nothing in this lawsuit amounted to the sort of unsupportable multiplication
of proceedings displayed in Home Indemnity. A little over two weeks after learning of
the judgment in the County Court Action, Justice’s counsel agreed to dismiss Justice’s
complaint.
Gemini also cites Affiliated Ute Citizens of State of Utah v. Ute Indian Tribe of
Uintah & Ouray Reservation, 21 F.3d 1120 (table), 1994 W L 142414 (10th Cir. Apr. 20,
1994) (“AUC”). AUC is a complicated case, but the upshot is that one particular
attorney purported to intervene on behalf of a party that was not contesting an
important ruling, and when that party finally did contest the ruling on appeal, the
attorney purported enter an appearance on behalf of that party and argue its position,
even though the party was represented by its own counsel. Id. at *1. The Tenth Circuit
imposed § 1927 sanctions because the attorney ’s “multiple filings, briefs and motions
have needlessly consumed the time of the various parties . . . and have unreasonably
complicated the resolution of the . . . appeal.” Id. at *2.
AUC has little or nothing to do with relitigating positions that had been rejected
previously. It focuses, rather, on one attorney’s bizarre conduct in attempting to argue
for a party he did not actually represent. Nothing of the kind occurred in this lawsuit.

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Again, Justice’s counsel could have displayed more diligence here. Perhaps a
colorable claim under Federal Rule of Civil Procedure 11(b) would have existed if
counsel had not withdrawn the complaint within twenty-one days from Gemini’s October
28 Letter. See Fed. R. Civ. P. 11(c)(2) (requiring 21 days’ warning and opportunity to
withdraw the challenged filing before moving for Rule 11 sanctions). But, having
withdrawn the complaint, and under the circumstances presented, the Court does not
find an unreasonable multiplication of proceedings.1
III. CONCLUSION
For the reasons stated, Gemini’s Motion for Attorneys’ Fees (ECF No. 14) is
DENIED.
Dated this 8th day of May, 2015.
BY THE COURT:

William J. Martínez
United States District Judge

1

As is typical in responses to motions for sanctions, Justice’s response argues that
Gemini should itself be sanctioned for filing a supposedly baseless motion for sanctions. (ECF
No. 17 at 8–9.) Justice cites no authority—not even § 1927—for such sanctions. Cf.
D.C.COLO.LCivR 7.1(d) (“a motion involving a contested issue of law shall state under which
rule or statute it is filed and be supported by a recitation of legal authority incorporated into the
motion”). Furthermore, Justice has not moved separately for such sanctions. Cf. WJM Revised
Practice Standard III.B (“All requests for the Court to take any action, make any type of ruling,
or provide any type of relief must be contained in a separate, written motion.” (emphasis in
original)). In any event, the Court finds in its discretion that sanctions against Gemini are
unwarranted. The Court notes, however, that Gemini cited Home Indemnity and AUC as if they
were published opinions (see ECF No. 18 at 3–4) when they are actually unpublished table
dispositions. Thus, more diligence may be needed all around.

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