Bain et al v. McIntosh et al

Filing 82

ORDER granting 52 Motion for Sanctions; granting 76 Motion for Attorney Fees. Signed by Judge Roy B. Dalton, Jr. on 10/4/2013. (VMF)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
DOROTHY B. WALTHER; and
HOWARD WALTHER,
Plaintiffs,
v.

Case No. 6:13-cv-472-Orl-37GJK

ROBERT MCINTOSH, ESQ.;
STENSTROM MCINTOSH, ET AL.,
P.A.; STEVEN KANE, ESQ.; and KANE
& KOLTUN, Attorneys at Law,
Defendants.
ORDER
This cause is before the Court on the following:
1.

Defendants’ Robert McIntosh, Esq. and Stenstrom, McIntosh, Colbert,
Whigham & Partlow, P.A., Motion for Sanctions Pursuant to Fed. R. Civ.
P. 11 and Memorandum of Law (Doc. 52), filed August 1, 2013;

2.

Plaintiffs’ Counsel’s (Colvin) Briefing in Opposition to Defendants’ Motion
for Sanctions and Supporting Memorandum of Law (Doc. 58), filed August
14, 2013;

3.

Plaintiffs’ Response to Defendants’ Motion for Sanctions Pursuant to Fed.
R. Civ. P. 11 and Memorandum of Law (Doc. 59), filed August 15, 2013;

4.

Plaintiffs’ Counsel, Phillips P. O’Shaughnessy’s Response and Opposition
to Defendants’ Motion for Sanctions Dated August 1, 2013 (Doc. 60), filed
August 15, 2013;

5.

Defendants’ Reply to Plaintiffs’ and Plaintiff’s Counsel’s Responses to

Defendants’ Motion for Sanctions Pursuant to Fed. R. Civ. P. 11 (Doc. 63),
filed August 29, 2013; and
6.

Defendants’, Robert McIntosh and Stenstrom McIntosh, et al., P.A.,
Motion to Determine Amount of Taxable Fees (Doc. 76), filed
September 6, 2013.

For the reasons set forth below, the Court will grant both motions.
BACKGROUND
Dorothy B. Walther is the income beneficiary of the James Walther Revocable
Life Insurance Trust. (Doc. 5, ¶ 14.) Howard Walther, her son, is a contingent
remainderman beneficiary of the Trust. (Id.) These Plaintiffs1 brought suit in state court
to remove the trustee, Patrick Walther, another of Dorothy Walther’s sons. (Id. ¶¶ 15–
16.) In need of an impartial assessment of the situation, the state court judge, John D.
Galluzzo, appointed Defendant Robert McIntosh, an attorney at Defendant Stenstrom,
McIntosh et al., P.A. (“Defendants”),2 as temporary co-trustee. (Doc. 17-4.)
Mr. McIntosh had not sought appointment and was appointed without objection.
(Doc. 16-1, 15:22–33:21.) He investigated the state of the Trust and reported his
findings to Judge Galluzzo. (Doc. 16-6.) Plaintiffs were represented by counsel3 and
had the opportunity to fully examine Mr. McIntosh regarding his findings. (Doc. 16-4,
1

In the underlying state court proceeding, Dorothy Walther, with Howard Walther
and Katherine Bain Walther as her attorneys in fact, brought suit. (See Doc. 16-11.)
Dorothy Walther and Howard Walther are Plaintiffs in this case. (Doc. 5.) Katherine
Walther Bain was formally a plaintiff in this case (Doc. 1) but is no longer one (see
Doc. 5).
2
For ease of reference, the Court refers only to Robert McIntosh and Stenstrom,
McIntosh et al., P.A. as “Defendants,” even though Steven Kane and Kane & Koltun are
defendants as well.
3
Plaintiffs’ attorneys in the underlying state court proceeding were different from
Plaintiffs’ counsel in this case.

2

30:10–34:4.) Mr. McIntosh reported that Dorothy Walther did not provide him with her
medical or financial records, as she felt that these were her private affairs. (Doc. 16-2,
15:3–6; Doc. 16-3, 7:7–12.) Plaintiffs’ counsel did not object to this statement and told
Judge Galluzzo that Dorothy Walther was not even in possession of the records. (Id. at
24:19–22, 37:21–38:2.) In fact, when Judge Galluzzo ordered that Dorothy Walther
disclose these records (id. at 34:21–35:9), Plaintiffs successfully appealed that order.
(See Doc. 16-8.) After Mr. McIntosh reported his findings to Judge Galluzzo’s
satisfaction, Judge Galluzzo discharged him without objection.4 (Doc. 16-4, 41:20–
44:23.) Judge Galluzzo ultimately denied Plaintiffs’ motion to remove Patrick Walther as
trustee based on the representations of Mr. McIntosh and Plaintiffs’ expert witness.
(See Doc. 16-4, 57:17–120:5; Doc. 16-5; Doc. 16-11.)
Plaintiffs then brought this suit against Mr. McIntosh and his law firm for breach
of fiduciary duties, alleging that Mr. McIntosh made misrepresentations to the state
court and committed perjury—including the statement that Dorothy Walther did not
provide him with her medical and financial records. (Doc. 5, ¶¶ 35–39, 43–69.) Plaintiffs
are represented by Phillips Paul O’Shaughnessy and John V. Colvin. Defendants
moved for summary judgment (Doc. 17), which the Court granted on the ground of
judicial immunity (Doc. 55). Defendants then moved for Rule 11 sanctions. (Doc. 52.)
Plaintiffs and their counsel opposed. (Docs. 58–60.) Defendants replied. (Doc. 63.) The
Court held a hearing on this matter on September 4, 2013. (Doc. 64.) This matter is
now ripe for adjudication.

4

Plaintiffs’ state court counsel merely raised the issue that payment of fees
should be worked out before Mr. McIntosh’s discharge. (Doc. 16-4, 41:20–44:23.)

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STANDARDS
Federal Rule of Civil Procedure 11 provides that sanctions may be imposed
against a party who files a pleading that: (1) has an improper purpose; (2) has no
reasonable legal basis; or (3) has no reasonable factual basis. Fed. R. Civ. P. 11; see
also Thomas v. Evans, 880 F.2d 1235, 1239 (11th Cir. 1989).

The court must

determine “whether a reasonable attorney in like circumstances could believe his
actions were factually and legally justified.” Kaplan v. DaimlerChrysler, A.G., 331 F.3d
1251, 1255 (11th Cir. 2003). Rule 11 contemplates “some prefiling inquiry into both the
facts and the law.” Fed. R. Civ. P. 11 advisory committee’s note. However, the aim of
Rule 11 is to “deter frivolous lawsuits and not to deter novel legal arguments or cases of
first impression.” Baker v. Alderman, 158 F.3d 516, 524 (11th Cir. 1998).
Courts must inquire into: “(1) whether the party’s claims are objectively frivolous;
and (2) whether the person who signed the pleadings should have been aware that they
were frivolous.” Id. “If the attorney failed to make a reasonable inquiry, then the court
must impose sanctions despite the attorney’s good faith belief that the claims were
sound.” Worldwide Primates, Inc. v. McGreal, 87 F.3d 1252, 1254 (11th Cir. 1996). The
reasonableness of an inquiry may depend on how much time was available for the
inquiry, whether the attorney relied on a client for information, or whether the attorney
depended on another lawyer. Id.
DISCUSSION
I.

Frivolousness
Defendants argue that there was no legal or factual basis for Plaintiffs’ claims.

(Doc. 52, p. 19.) Specifically, Defendants contend that there was no legal basis for the
suit because, as the Court determined on summary judgment, Boullion v. McClanahan,

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639 F.2d 213, 214 (5th Cir. 1981), was dispositive on the judicial immunity issue. (Doc.
52, pp. 19–22.) Defendants further aver that there was no factual basis for the allegation
that Mr. McIntosh lied about not having received Dorothy Walther’s medical and
financial records, as Plaintiffs represented in the state court proceedings that the
records were not in her possession to produce and appealed the state court’s order
directing disclosure of the records. (Id. at 22–23.)
Given that Boullion was in a bankruptcy context and that the other cases on
which the Court relied in concluding that Mr. McIntosh was entitled to judicial immunity
were also in the context of other kinds of court appointees (see Doc. 55, pp. 5–8), those
cases did not definitively control the result in this one. The Court drew analogies from
those cases and relied on their central ideas that: (1) when a court-appointed actor acts
within the scope of his authority and pursuant to a judge’s orders, he is protected; and
(2) without judicial immunity, such actors would be chilled in accepting court-appointed
roles and reporting their findings to the court. (See id.) Although such cases were
highly analogous, they were nonetheless not directly controlling. Thus, the Court
concludes that Plaintiffs’ legal position was not completely frivolous. See Anderson v.
Smithfield Foods, Inc., 353 F.3d 912, 916 (11th Cir. 2003) (reversing district court’s
imposition of sanctions in part because there was a “paucity of controlling precedent” on
the issue that the sanctioned party argued). Nonetheless, the Court considers the
tenuousness of Plaintiffs’ legal position to be a factor deserving of consideration.
As to factual sufficiency, Plaintiffs and their counsel contend that there was a
sufficient factual basis for this case because Katherine Walther Bain’s affidavit states
that Mr. McIntosh did, in fact, receive Dorothy Walther’s medical and financial records,
contrary to Mr. McIntosh’s representations in state court. (Doc. 59, pp. 2–4; Doc. 60,

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pp. 8–9.) The Court finds this argument unpersuasive. Mr. McIntosh is a respected
member of the legal community with a longstanding, unblemished record as a member
of the bar. Indeed, he was appointed by Judge Galluzzo because of this reputation.
(See Doc. 16-1, 15:22–16:4.) He was a stranger to the litigation and had no interest in
its outcome. He was appointed without objection.5 When he represented his findings to
the state court, no one protested. Indeed, Plaintiffs’ state court attorneys told Judge
Galluzzo—consistent with Mr. McIntosh’s representations—that Dorothy Walther did not
have her medical and financial records, and they described the effort to obtain them as
a “fishing expedition.” (Doc. 16-3, 25:20–25.) After Judge Galluzzo was satisfied that
Mr. McIntosh had carried out his duties, Judge Galluzzo asked if anyone objected to his
discharge. No one did. Only after Judge Galluzzo ultimately declined to remove Patrick
Walther as trustee did interested persons on the losing side of that ruling come out of
the woodwork to claim that Mr. McIntosh committed perjury.
Mr. O’Shaughnessy represented at the hearing that the only factual investigation
that he undertook regarding Mr. McIntosh’s representations prior to bringing this lawsuit
and throughout its pendency involved speaking with Katherine Walther Bain and other
members of the Walther family. Plaintiffs’ counsel had a duty to thoroughly investigate
the facts before bringing this lawsuit in federal court accusing an exemplary member of
the bar of perjury. The absence of objection to Mr. McIntosh’s representations during
the state proceedings and Plaintiffs’ affirmative attempts to prevent the records
disclosure should have been red flags to the attorneys to look more earnestly into the
5

Though Mr. O’Shaughnessy stated multiple times at the hearing that the state
court lacked legal authority to appoint Mr. McIntosh as a co-trustee with the power to
investigate the handling of the trust, no one objected to his appointment at the time and
that issue is not properly before the Court.

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facts of this case. Under the totality of the circumstances, when faced with a single, selfinterested affidavit and a mountain of contrary factual evidence—including the
representations of Plaintiffs’ own attorneys in the state proceedings—merely talking to
trust beneficiaries and family members who were unhappy with Judge Galluzzo’s
decision was wholly insufficient. The Court finds that a reasonable lawyer would have
undertaken a more thorough inquiry on this issue.
Additionally, Mr. O’Shaughnessy conceded at the hearing that the underlying
probate dispute has been bitter and hotly contested. The acrimony of that dispute—in
which siblings are pitted against each other and Plaintiffs have evinced their
litigiousness by filing several other lawsuits related to the probate dispute in both Florida
and California courts (see Doc. 19, p. 2; Doc. 52, p. 2)—should have similarly led
counsel to conduct a more prudent inquiry into the factual basis for bringing this action.
Considered as a whole, the tenuous nature of the legal basis for the claims, the
litigiousness of Plaintiffs coupled with the acrimonious probate context of the dispute,
the potential damage to the reputation of a dispassionate court-appointed lawyer, the
inflammatory tone of the Complaint, and the lack of a sufficient factual inquiry would
cause a reasonable lawyer to consider this action objectively frivolous. Therefore, the
motion for sanctions will be granted.
II.

Sanctions
The United States Court of Appeals for the Eleventh Circuit utilizes a lodestar

approach to calculate attorney’s fees, whereby the court multiples the number of hours
reasonably expended by a reasonable hourly rate. See Loranger v. Stierheim, 10 F.3d
776, 781 (11th Cir. 1994). The movant bears the burden of establishing
reasonableness. See Norman v. Hous. Auth. of City of Montgomery, 836 F.2d 1292,

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1303 (11th Cir. 1988). The movant must exercise “billing judgment” to exclude fees for
“excessive, redundant, or otherwise unnecessary” work. Hensley v. Eckerhart, 461 U.S.
424, 434 (1983). The movant must also produce “satisfactory evidence” that the hourly
rate requested comports with “the prevailing market rate in the relevant legal community
for similar services by lawyers of reasonably comparable skills, experience, and
reputation.” Norman, 836 F.2d at 1299.
In their motion to determine the amount of taxable fees, Defendants state that
they have expended $42,710.00 defending this lawsuit. (Doc. 76.) Mr. Lawton’s rate is
$225 per hour; Mr. Robinson’s rate is $200 per hour; Ms. Connor’s rate is $150 per
hour; and Ms. Kennedy’s paralegal rate is $100 per hour. (Docs. 76-1, 76-2.) The Court
finds that these rates are exceedingly reasonable. See Norman, 836 F.2d at 1303
(noting that the court itself is an expert as to the reasonableness of attorney’s fees). The
Court will impose monetary sanctions in the amount equivalent to the work performed
beginning with counsel’s drafting of the May 14, 2013 Rule 11 notice to Plaintiffs’
counsel. (See Doc. 76-1, p. 8.) The total amount that Defendants expended from that
point forward was $28,945.00. (Id. at 8–21.) The Court finds that Rule 11’s goal of
effective deterrence would be effectuated by imposing sanctions in that amount. See
Fed. R. Civ. P. 11(c)(4). Thus, the Court will award Defendants $28,945.00 in monetary
sanctions from Plaintiffs’ counsel.
The Court finds that it is appropriate to apportion the monetary sanctions such
that Mr. O’Shaughnessy is responsible for the greater portion. In Mr. Colvin’s response
to Defendants’ motion for sanctions, he stated that he was only local counsel for
Plaintiffs and merely signed the Complaint because Mr. O’Shaughnessy had not yet
been admitted in the Middle District of Florida. (Doc. 58.) He averred that Mr.

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O’Shaughnessy did all of the substantive legal work (id.) and stated at the hearing that
he relied on Mr. O’Shaughnessy’s representations as to the veracity of the factual
allegations. That Mr. Colvin depended on Mr. O’Shaughnessy’s inquiry into factual and
legal reasonableness is a mitigating factor for the insufficiency of his own inquiry. See
Worldwide Primates, 87 F.3d at 1254. Mr. Colvin is still nevertheless responsible for
signing and filing the original and amended complaints (Docs. 1, 5). See Fed. R. Civ. P.
11(b) (stating that by presenting to the court a pleading—“whether by signing, filing,
submitting, or later advocating it”—an attorney certifies that it complies with Rule 11’s
requirements). Mr. O’Shaughnessy will therefore be responsible for 75% and Mr. Colvin
will be responsible for 25% of the sanction. The Court holds counsel’s law firms jointly
responsible. See Fed. R. Civ. P. 11(c)(1).
Thus, the Court imposes sanctions on: (1) Phillips Paul O’Shaughnessy and his
law firm Phillips P. O’Shaughnessy P.A. in the amount of $21,708.75, to be paid to
Defendants Robert McIntosh, Esq. and Stenstrom McIntosh et al., P.A.; and (2) John V.
Colvin and his law firm Mooney Colvin, P.L. in the amount of $7,236.25, to be paid to
Defendants Robert McIntosh, Esq. and Stenstrom McIntosh et al., P.A.
CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED:
1.

Defendants’ Robert McIntosh, Esq. and Stenstrom, McIntosh, Colbert,
Whigham & Partlow, P.A., Motion for Sanctions Pursuant to Fed. R. Civ.
P. 11 and Memorandum of Law (Doc. 52) is GRANTED.

2.

Defendants’, Robert McIntosh and Stenstrom McIntosh, et al., P.A.,
Motion to Determine Amount of Taxable Fees (Doc. 76) is GRANTED.

3.

On or before November 29, 2013, Phillips Paul O’Shaughnessy and

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Phillips P. O’Shaughnessy P.A. are DIRECTED to pay $21,708.75 to
Defendants Robert McIntosh and Stenstrom McIntosh et al., P.A.
4.

On or before November 29, 2013, John V. Colvin and Mooney Colvin, P.L.
are DIRECTED to pay $7,236.25 to Defendants Robert McIntosh and
Stenstrom McIntosh et al., P.A.

DONE AND ORDERED in Chambers in Orlando, Florida, on October 4, 2013.

Copies:
Counsel of Record

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