Bowers v. Wells Fargo Bank, N.A. et al

Filing 108

MEMORANDUM AND ORDER granting 49 defendant Wells Fargo's Motion for Sanctions; denying 87 plaintiffs' Motion to Alter Judgment; and denying 107 plaintiffs' Motion for Reconsideration. Signed by Chief Judge J. Thomas Marten on 3/18/15. (mss)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

Cleo Clemmons, Administrator of the
Estate of Sheila Bowers, deceased, et al.,
Plaintiffs,
vs.

Case No. 14-4020-JTM

Wells Fargo Bank, N.A., et al.,
Defendants.

MEMORANDUM AND ORDER

This matter is before the court on the defendant Wells Fargo’s Motion for Sanctions
(Dkt. 49) under FED.R.CIV.Pr. 11, and the plaintiffs’ Motion to Alter and Amend the
dismissal of the action. (Dkt. 87).
The present action arises from the decision of an elderly couple, Roy and Sheila
Bowers, to refinance their home. The couple reached a satisfactory agreement for
refinancing with the lender Wells Fargo. However, the escrow agent assigned to the case
mistakenly released the first mortgage lien prior to the closing. The Bowers made several
months payments before the error was discovered. Aided by their present counsel, the
Bowers brought an action against an electronic mortgage servicing entity employed by
Wells Fargo alleging fraud, conversion, slander of title, and other misconduct. Bowers v.

MERS, No. 10-4141-JTM (Bowers I). Wells Fargo intervened in the action. After extensive
discovery and litigation, the court granted the defendants’ motions for summary judgment,
denying the Bowers’s claims, and granting Wells Fargo’s counterclaim seeking an equitable
mortgage on the residence, based on the terms of the intended refinancing. Finding the
plaintiffs’ claims lacking in any substantial merit, the court also granted the defendants’
motion for attorney fees.
After the termination of Bowers I, and while the appeal in that case was pending
before the Tenth Circuit, counsel for plaintiffs filed this action (Bowers II) in Shawnee
County, Kansas District Court. The 192-paragraph Complaint filed in Bowers II is
essentially a carbon copy of that filed in Bowers I, except that counsel added claims against
Wells Fargo’s attorneys in Bowers I, the law firm of Shapiro & Mock, LLC. The claims
against Shapiro & Mock are premised entirely on their actions in seeking to protect Wells
Fargo’s mortgage interest in the property.
After Wells Fargo moved to dismiss the action, plaintiffs’ counsel sought and
obtained multiple extensions to file a response, in part based upon the death of Sheila
Bowers. Counsel subsequently filed an Amended Complaint (Dkt. 30) which advanced no
new cause of action. Rather, the Amended Complaint simply reworded a few of the
allegations from the original Complaint.
Only two days later, counsel for plaintiffs filed a Motion to Substitute Second
Amended Complaint (Dkt. 31). In a declaration attached to the motion, counsel stated that
she “has had more time to reflect” on the Amended Complaint, and believed it was
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“necessary” to advance aditional allegations. The Second Amended Complaint raises
arguments with respect to discovery disputes addressed in Bowers I.
On December 22, 2014, the Tenth Circuit affirmed this court’s award of summary
judgment in Bowers I.
On December 30, 2014, this court granted the motions to dismiss (Dkt. 15, 24, 37, 42)
filed by the defendants in Bowers II. (Dkt. 83). The court found that the Bowers’ claims were
barred by the doctrine of res judicata and the statute of limitations. Noting the death of Roy
Bowers during the pendency of Bowers I, and of Sheila Bowers during Bowers II, the court
concluded that these losses were made “doubly unfortunate that [their] last years were
marked by the meritless litigation urged on by their counsel.” (Id. at 11).
The motion for sanctions now before the court was filed prior to the Order
dismissing the action. Resolution of the sanctions motion was delayed by repeated requests
for extensions of time for the filing of plaintiffs’ response (Dkt. 54, 61, 71, 75).

Motion to Alter and Amend
Before addressing plaintiffs’ Motion to Alter and Amend the dismissal of the action,
the court first must address plaintiffs’ recently-filed Motion for Reconsideration (Dkt. 107),
which seeks to overturn the court’s denial of a requested extension of time to file a reply
in support of the motion to alter and amend. The only basis for relief cited in the motion
for extension was an unspecified out-of-town trip by plaintiff’s counsel. The court denied
the request, noting “(a) the fact that counsel's out-of-town travel does not commence until
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March 12, 2015; (b) the extremely brief Responses (Dkts. 103, 104) of the defendants to the
Motion to Alter and Amend; and (c) the protracted nature of the present litigation, pending
nearly a year, in which the relevant res judicata issues have been manifest from the date
of the Wells Fargo's initial Motion to Dismiss, filed April 14, 2014.” (Dkt. 106).
The present Motion for Reconsideration offers a variety of grounds, coupled with
a general insinuation that the court considers “distasteful [counsel’s] advocacy on issues
that I believe in on facts that I am very certain are true.” (Dkt. 107, at 4) The motion further
contends that counsel suffers from “medical restrictions” and that as a result under the
Americans with Disabilities Act, 42 U.S.C. § 12010 et seq. she “should be afforded
reasonable accommodation.” (Id., at 1, 2).Counsel suggests the denial was premised on
“hostility upon possible assumptions [which] just cast doubts upon the case.” (Id. at 3). In
these comments, counsel apparently is elliptically referring to separate litigation brought
by another Kansas attorney, seeking to stave off his disbarment. Hawver v. Marten, No. 144084-DGK.1 Counsel also represents her “full belief that Roy and Sheila [her late clients]
would expect that we go” on the “planned spring break trip with my daughter and
husband. (Id. at 4, 5). Finally, counsel again references other litigation in which she states

In Hawver, the plaintiff seeks an injunction requiring the undersigned to
intervene and prevent his disbarment by the judiciary of the State of Kansas. As to the
undersigned, plaintiff explicitly seeks declaratory relief “and no monetary damages.”
(Dkt. 1, ¶ 131). The case has been assigned to the Chief Judge of the Western District of
Missouri. (Dkt. 21). The court notes that the court has dismissed Hawver’s claims
against the defendants involved in the state disciplinary panel (Dkt. 49), and further
denied Hawver’s request for injunctive relief as moot in light of the February 23, 2015
decision by a three-judge panel disbarring the plaintiff.
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she has “had very successful outcomes and these types of claims in the six figure range.”
(Id. at 4) (emphasis by counsel).
Reconsideration is not justified. Counsel’s medical condition was not cited as
grounds for the extension, only the planned vacation. The Court will not consider such a
new argument raised for the first time in a motion for reconsideration. HR Tech., v. Imura
Internat’l, 2011 WL 836734, *3 (D. Kan. March 4, 2011). The suggestion that the court has not
been accommodating to counsel or bears her any personal animosity is completely devoid
of any rational basis in fact.
The original rationales for the denial of the extension remain fully applicable. The
out-of-town travel, now acknowledged to be entirely personal in nature, did not commence
until the day before the deadline for a response. The defendants’ Responses to the Motions
to Alter and Amend (Dkts. 103, 104) were extremely brief, each presenting no more than
three pages of argument. Finally, given the many extensions previously granted counsel,
and the great length of time already allotted to plaintiffs to show some basis for this
repetitive litigation, further delay would not materially advance the interests of justice.
Turning to the merits of the Motion to Alter and Amend, the court first notes that
plaintiffs ground the request for relief on Fed.R.Civ.Pr. 56, which governs summary
judgment. A request to alter and amend a judgment is governed by Rule 59, not Rule 56.
A motion to reconsider under Fed.R.Civ.Pr. 59(e) may be granted to correct manifest
errors, or in light of newly discovered evidence; such a motion is directed not at initial
consideration but reconsideration, and is appropriate only if the court has obviously
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misapprehended a party's position, the facts, or applicable law, has mistakenly decided
issues not presented for determination, or the moving party produces new evidence which
it could not have obtained through the exercise of due diligence. Anderson v. United Auto
Workers, 738 F.Supp. 441, 442 (D. Kan. 1989). A motion to reconsider is not "a second
chance for the losing party to make its strongest case or to dress up arguments that
previously failed." Voelkel v. GMC, 846 F.Supp. 1482 (D.Kan.), aff'd, 43 F.3d 1484 (10th Cir.
1994). The resolution of the motion is committed to the sound discretion of the court.
Hancock v. City of Oklahoma City, 857 F.2d 1394, 1395 (10th Cir. 1988).
The court finds no basis for setting aside the dismissal of the action. Plaintiffs’
motion to alter and amend (Dkt. 87, 88) is a repetition of earlier arguments in both Bowers
I (Dkt. 48, 70, 132, 134, 138) and Bowers II (Dkt. 56, 57). Plaintiffs have failed to present any
newly-discovered evidence which would support the requested reconsideration. The
present action does add claims against Wells Fargo’s prior law firm, but as the court noted
in its order of dismissal, the actions by the defendant law firm took place in the context of
its representation of Wells Fargo, and that defendant is also entitled to the protection of res
judicata.

Rule 11 Sanctions
The court uses an objective standard to review an attorney’s conduct under Rule 11;
the question is whether a reasonable and competent attorney would believe in the merit
of the argument. Dodd Ins. Servs., Inc. v. Royal Ins. Co. of Am., 935 F.2d 1152, 1155 (10th
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Cir.1991). Subjective bad faith is not required to trigger Rule 11 sanctions. Burkhart ex rel.
Meeks v. Kinsley Bank, 804 F.2d 588, 589 (10th Cir.1986). “A good faith belief in the merit of
an argument is not sufficient; the attorney's belief must also be in accord with what a
reasonable, competent attorney would believe under the circumstances.” White v. Gen.
Motors Corp., 908 F.2d 675, 680 (10th Cir.1990) (citing Adamson v. Bowen, 855 F.2d 668, 673
(10th Cir. 1988)).
“Under Rule 11, the person who signs a pleading, motion, or other paper filed with
the court, certifies that he or she has conducted a reasonable inquiry into the factual and
legal basis for the filing, and that the substance of the filing is well-grounded in fact and
law.” Coffey v. Healthtrust, Inc., 955 F.2d 1388, 1393 (10th Cir.1992).
The decision whether a Rule 11 violation was committed is committed to the
discretion of the district court. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 404-409
(1990). However, once a Rule 11 violation is found to exist, the imposition of some sanction
is mandatory. See Griffen v. City of Okla. City, 3 F.3d 336, 342 (10th Cir.1993) (“Rule 11
requires the district court to impose sanctions if a document is signed in violation of the
Rule”). The court retains discretion to determine the appropriate sanction. White v. Gen.
Motors Corp., 908 F.2d 675, 683 (10th Cir.1990)
If sanctions are required, the court will consider the type and extent of the sanctions
in light of the purposes of Rule 11: “(1) deterring future litigation abuse, (2) punishing
present litigation abuse, (3) compensating victims of litigation abuse, and (4) streamlining
court dockets and facilitating case management.” Id. Deterrence, not compensation to the
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injured party, is the primary goal. Id. The amount of sanctions must be the minimum
amount necessary to deter future violations. Id. at 680.
Courts have repeatedly held Rule 11 is violated when a party, without justification,
attempts to resurrect previously-dismissed litigation. “A plaintiff may be sanctioned under
Rule 11 for filing claims barred by res judicata.” Thomas v. Evans, 880 F.2d 1235, 1240 (11th
Cir.1989). See also Huntsman v. Perry Local Schools Bd. of Educ., 379 Fed.Appx. 456, 463 (6th
Cir. 2010) (concluding district court did not err in imposing sanctions against attorney “for
filing this complaint which was so clearly barred by the statute of limitations and by res
judicata”); Zaldivar v. City of Los Angeles, 780 F.2d 823, 832 (9th Cir.1986) (“[w]ithout
question, successive complaints based upon propositions of law previously rejected may
constitute harassment under Rule 11") (overruled on other gds., Cooter & Gell, 496 U.S. at 384);
Kountze v. Gaines, 536 F.3d 813, 819 (8th Cir. 2008) (affirming award of sanctions in action
by whose “claims ... were virtually identical to those filed by his father” in earlier
litigation). Cf. Matric IV, Inc., v. American Nat. Bank & Trust, 649 F.3d 539, 553 (7th Cir. 2011)
(upholding denial of sanctions against plaintiff since application of res judicata “was not
so clear cut”).
In Cory v. Fahlstrom, 143 Fed.Appx. 84, 88 (10th Cir. 2005), the court declined to
award sanctions on appeal for plaintiff’s repeated assertion of previously-rejected
arguments. However, in reaching this conclusion, the court stressed plaintiff’s pro se status
and the possibility that he “may not have ... understood” that the district court’s warning
against further reargument applied to an appeal. Id. The court otherwise warned that
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sanctions would be properly awarded if plaintiff continued:
This appeal is indeed frivolous, and Mr. Cory would have no just cause for
complaint if sanctions were imposed. Whatever the arguable merits of his
original case, he lost, and it is an abuse of the judicial system for him to
continue to harass his opponents with repeated litigation of the same
claims.... A court is not like a pin-ball machine, in which a player dissatisfied
with his result can try his hand over and over again. Once a litigant has had
a full and fair opportunity to present his claims in court and has lost, it is
time for him to “accept” the result, at least to the extent of refraining from
bringing repetitive lawsuits.
Id. See also Nikols v. Chesnoff, 435 Fed.Appx. 766, 773 (10th Cir. 2011) (finding district court
erred in denying as moot a motion for sanctions arguing the case was precluded by res
judicata, while simultaneously granting defendant’s motion to dismiss on the same
grounds).
This court has awarded sanctions under Rule 11 where “plaintiff's counsel, after a
reasonable inquiry, should have determined that plaintiff's claims against the Attorneys
were barred by res judicata, collateral estoppel, and the applicable Kansas statute of
limitations.” Augustine v. Adams, 88 F.Supp.2d 1166, 1174 (D. Kan. 2000).
In contrast, in “a close decision for the court,” the court in Sheldon v. Khanal, No. 102412-CM 2010 WL 3825489, *2 (D. Kan. 2010), ultimately decided against awarding
sanctions because “an intervening event occurred before counsel filed this case,” the
reversal of a related New York state court decision. “Arguably,” the court concluded, “this
decision gave counsel reason to believe that it might be appropriate to file another action
based on the same set of events.” Id. But for this intervening event, the court stressed,
“[c]ounsel's act in filing a case that, in the court's eyes, is fairly clearly barred by the
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doctrine of res judicata, borders on objectively unreasonable.” Id.
As this court observed in Zhu v. St. Francis Health Center, 413 F..Supp.2d 1232, 124243 (D.Kan. 2006), “[t]he time to end this litigation is well past.” The pro se plaintiff in Zhu
filed five lawsuits stemming from the same operative set of facts, lawsuits which were “not
merely without merit [but] manifestly abusive, overreaching and straining on court
resources.” Id. Accordingly, the district court granted defendant’s motion to dismiss on res
judicata grounds. The Tenth Circuit affirmed the dismissal, finding that “[b]ecause the
relevant facts in Ms. Zhu's federal complaint are all related in time, space and origin to the
relevant facts in her state complaint, the district court did not err in concluding that they
arose out of the same transaction or series of connected transactions and that Ms. Zhu's
RICO claim therefore was barred by res judicata.” Xianguyan Zhu v. St Francis Health Ctr.,
215 F3d.Appx. 717, 720 (10th Cir. 2007) After the district court fixed the amount of
sanctions, the Tenth Circuit affirmed the award. 278 Fed.Appx. 825 (10th Cir. 2008)
In determining whether to assess sanctions, the court takes note of the substantial
award of attorney fees granted Wells Fargo in Bowers I. However, the award in Bowers I
served no punitive purpose. The amount of fees was never directly challenged by the
plaintiffs. (Bowers I, Dkt. 352, at 8-10). Rather, the court stressed that the size of the award
was directly proportional to the “unboundedly aggressive strategy” employed by
plaintiffs’ actions in extensive and needless discovery and meritless legal argument. The
court further noted that it had been explicitly forced to “admonish plaintiff against the
repetition of losing arguments.” (Id. at 7).
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Rather than taking these repeated admonitions to heart, counsel instituted Bowers
II, and has never presented any colorable rationale why the principle of res judicata would
not apply. Moreover, none of the considerations recognized in other cases as mitigating
against an award of sanctions is present here. The motion for sanctions is not directed at
a pro se litigant, but at counsel. There was no intervening court decision which might
arguable justify the filing of a second action. The court concludes that the filing of Bowers
II was not objectively reasonable.

Amount of Sanctions
Plaintiffs’ response to the Motion for Sanctions (Dkt. 82) wholly fails to address the
appropriate type or amount of sanctions to be imposed in light of the factors recognized in
White. The response, moreover, fails to even acknowledge the elements of res judicata.
Indeed, the response mentions the doctrine in a single passage, in its conclusion, with
plaintiffs suggesting the doctrine is irrelevant in Bowers II because “the claims pled were
not before the Court” previously in Bowers I. Dkt. at 13. This misunderstands res judicata,
which as noted in the court’s earlier Order, applies to claims which were or could have been
brought in the earlier action. As in Zhu, plaintiffs’ claims in Bowers II “all related in time,
space and origin to the relevant facts in [the first federal] complaint,” and arise “out of the
same transaction or series of connected transactions,” and are consequently barred by res

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judicata.2
No amount of intemperate language can remedy this legal flaw. Indeed, counsel’s
hyperbolic language (“this Counsel can be beat to the ground but eventually another will
stand in my place” and “[t]he issues in [Bowers II] were bigger than the Bowers and they
are bigger than these two Counsel” (Dkt. 82, at 13-14)) raises the concern that even now
counsel fails to understand finality of the court’s orders, thereby directly highlighting the
need for some minimum sanction sufficient to deter a Bowers III.
IT IS ACCORDINGLY ORDERED this 18th day of March, 2015, that the Plaintiffs’
Motions to Alter and Amend (Dkt. 87) and for Reconsideration (Dkt. 107) are denied;
defendant’s Wells Fargo’s Motion for Sanctions is granted. Counsel is hereby enjoined from
filing any future litigation on behalf of the Bowers or their estate representatives; Wells
Fargo shall submit in camera documentation as to the amount of its legal expenses in the
present action within 20 days of this Order.

The court further notes that Wells Fargo apparently gave counsel a draft of the
motion for sanctions prior to filing, with the pointed reminder that time remained for
counsel to dismiss Bowers II. Rather than seizing the opportunity to avoid sanctions,
counsel replied with a rambling letter avoiding any discussion of the elements of res
judicata. Instead, without any indication that she had actually consulted her remaining
clients (now the Bowers Estates), counsel refused to withdraw the action. Further,
counsel stressed events occurring in other mortgage lending cases. Comparing the
“important consumer and social litigation” in the present case to Plessy v. Fergusyon,
counsel indicated that the narrow interest of her putative clients carried little weight,
since “these claims are much larger than the Bowers. They had a social conscience
which lives through their legacy.” (Dkt. 49-3, at 4).
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s/ J. Thomas Marten
J. THOMAS MARTEN, JUDGE

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