US BANK NA AS LEGAL TITLE TRUSTEE FOR TRUMAN 2013 SC3 TITLE TRUST v. HLC ESCROW INC et al

Filing 76

MEMORANDUM DECISION AND ORDER ON DEFENDANT'S MOTION FOR SANCTIONS By MAGISTRATE JUDGE JOHN H. RICH III. (lrc)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
US BANK NA AS
LEGAL TITLE TRUSTEE FOR
TRUMAN 2013 SC3 TITLE TRUST,
Plaintiff
v.
FIRST AMERICAN TITLE
INSURANCE COMPANY,
Defendant

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No. 1:16-cv-00453-GZS

MEMORANDUM DECISION AND ORDER ON
DEFENDANT’S MOTION FOR SANCTIONS
Defendant First American Title Insurance Company (“First American”) moves for
sanctions against plaintiff US Bank NA as Legal Title Trustee for Truman 2013 SC3 Title Trust
(“US Bank”) for its failure to send a representative with full settlement authority to a scheduled
judicial settlement conference. See ECF No. 59 (oral motion for sanctions); First American’s
Motion for Sanctions for Failure to Attend Judicial Settlement Conference (ECF No. 65) (either
or both, “Motion”). US Bank objects to the imposition of sanctions or, in the alternative, requests
that any sanctions be limited to the cost of the appearance of First American’s representative. See
Plaintiff’s Objection to Defendant’s Motion for Sanctions (“Objection”) (ECF No. 71) at 2-5. For
the reasons that follow, I grant First American’s motion for sanctions and order US Bank to
reimburse First American the sum of $14,318.82, as requested.1

In the parallel setting of the imposition of sanctions for discovery violations, the First Circuit has held that “[m]otions
for sanctions . . . ordinarily should be classified as nondispositive.” Phinney v. Wentworth Douglas Hosp., 199 F.3d
1, 6 (1st Cir. 1999). While “a departure from this general rule may be necessary in those instances in which a
magistrate judge aspires to impose a sanction that fully disposes of a claim or defense[,]” the imposition of a monetary
sanction, alone, is nondispositive. Id.
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I. Applicable Legal Standard
“Federal courts possess certain inherent powers, not conferred by rule or statute, to manage
their own affairs so as to achieve the orderly and expeditious disposition of cases.” Goodyear Tire
& Rubber Co. v. Haeger, 137 S. Ct. 1178, 1186 (2017) (citation and internal quotation marks
omitted). “That authority includes the ability to fashion an appropriate sanction for conduct which
abuses the judicial process.” Id. (citation and internal quotation marks omitted).

“[O]ne

permissible sanction” is an order “instructing a party that has acted in bad faith to reimburse legal
fees and costs incurred by the other side.” Id. “[S]uch a sanction, when imposed pursuant to civil
procedures, must be compensatory rather than punitive in nature.” Id. “In other words, the fee
award may go no further than to redress the wronged party for losses sustained; it may not impose
an additional amount as punishment for the sanctioned party’s misbehavior.” Id. (citation and
internal quotation marks omitted).
Additionally, under Federal Rule of Civil Procedure 16(f), a court may issue “any just
orders,” including sanctions pursuant to Federal Rule of Civil Procedure 37, “if a party or its
attorney . . . fails to appear at a scheduling or other pretrial conference” or “fails to obey a
scheduling or other pretrial order.” Fed. R. Civ. P. 16(f)(1)(A), (C). Rule 16(f) further provides:
Instead of or in addition to any other sanction, the court must order the party, its
attorney, or both to pay the reasonable expenses – including attorney’s fees –
incurred because of any noncompliance with this rule, unless the noncompliance
was substantially justified or other circumstances make an award of expenses
unjust.
Fed. R. Civ. P. 16(f)(2). “Sanctions may be awarded under Rule 16(f) without a finding of bad
faith.” Vicente v. Ljubica Contractors LLC, No. 18-CV-0419 (VSB) (OTW), 2019 WL 2137001,
at *4 (S.D.N.Y. May 16, 2019).
The conduct for which courts have imposed sanctions includes failure to comply with court

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orders regarding settlement conferences. See, e.g., Negron v. Woodhull Hosp., 173 F. App’x 77,
79 n.1 (2d Cir. 2006) (“Although a court cannot force litigants to settle an action, it is well
established that a court can require parties to appear for a settlement conference, and impose
sanctions pursuant to Rule 16(f) if a party fails to do so.”) (citations and internal quotation marks
omitted); Lucas Auto. Eng’g, Inc. v. Bridgestone/Firestone, Inc., 275 F.3d 762, 769 (9th Cir. 2001)
(upholding sanctions award against president of vintage tire company pursuant to Rule 16(f) for
failure to appear at mediation session when, although tire company claimed his nonappearance
was due to an incapacitating headache and not intentional, he did not notify the parties beforehand
that he could not appear).
For purposes of the instant motion, I proceed pursuant to Rule 16(f). See, e.g., Vicente,
2019 WL 2137001, at *4 (imposing sanctions for failure to attend three court conferences pursuant
to Rule 16(f) rather than, inter alia, the court’s inherent authority when “sanctions under Rule
16(f) provide[d] a sufficient remedy”).
II. Background
At the request of both parties, I issued an order dated May 23, 2019, scheduling this matter
for a settlement conference in my chambers at 10:00 a.m. on July 11, 2019. See Procedural Order
Setting Case for Settlement Conference (“Order”) (ECF No. 53). I ordered that “counsel appear
with their clients at such time and place, fully authorized to accomplish settlement of the case and
prepared to engage in effective settlement negotiations.” Id. I further ordered the parties’ counsel
to “file with the court, on or before July 3, 2019, a written in camera statement, not to exceed 5
pages, setting forth in detail the settlement position of the respective party and stating in concise
detail the reasons for each aspect of that settlement position.” Id. I directed that each such
statement contain “a clear and concise rationale in support of that party’s settlement position[.]”
Id.
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First American timely supplied an in camera statement complying with the foregoing
directives. On July 9, 2019, six days past its deadline, US Bank submitted its in camera statement.
First American appeared for the settlement conference through Vincent Ferro, its Vice President
and Senior Regional Claims Counsel, who had traveled from Long Island, New York, and had full
authority to settle this matter for any reasonable amount. Approximately an hour and a half prior
to the scheduled settlement conference, US Bank informed the court that it would not have a
representative present. Instead, it arranged for a representative, Roberto Montoya, to participate
by telephone. I noted that this raised a serious issue of noncompliance with the court’s order. Mr.
Montoya indicated that it had been a mistake not to have a representative present, and that there
had been a scheduling error. First American’s counsel orally moved for sanctions based on the
non-appearance. See ECF No. 59.
The conference proceeded, adjourning after three-and-a-half hours when a proposed
settlement range exceeded Mr. Montoya’s authority. I convened a hearing afterward during which
counsel for First American renewed its oral motion for sanctions, and I set a schedule to brief that
motion, see ECF Nos. 59, 60, 63, pursuant to which First American filed its written motion for
sanctions on July 24, 2019, see Motion. First American also separately filed an itemized bill of
fees and costs, totaling $14,318.82, incurred in preparing for and attending the July 11, 2019,
settlement conference and briefing the motion for sanctions. See First American’s Bill of Fees and
Costs Related to Settlement Conference (“Bill of Costs”) (ECF No. 66).
III. Discussion
As First American argues, see Motion at 1-2, US Bank violated this court’s May 23, 2019,
order in several ways, most notably by failing to send a representative to the July 11, 2019,
settlement conference who had full authority to settle this matter. US Bank also missed its July 3,

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2019, deadline to file its in camera statement and failed to notify the court and First American
until the morning of the conference that it would not appear. See id. at 3 (citing Carrington Mortg.
Servs., LLC v. Gionest, 2:16-cv-00534-NT, 2019 WL 1373647 (D. Me. Mar. 26, 2019)).
US Bank objects to the imposition of sanctions on the bases that its failure to send a
representative to appear personally was an oversight, it negotiated in good faith, and the outcome
of the settlement conference would have been the same regardless of whether its representative
had personally appeared. See Objection at 2, 5. It argues that Carrington is distinguishable,
involving (i) an individual consumer defendant who did not have the same bargaining power as
the plaintiff lender, (ii) a history of prior bad-faith negotiations on the part of the lender, and (iii) a
request by the consumer for dismissal of the case with prejudice because the lender had failed to
provide a written report to the court and inform the consumer of the basis for its denial of her loan
modification application. See id. at 3-5.
In the alternative, US Bank argues that any sanction should be limited to First American’s
cost of sending its representative to the settlement conference, which is “commensurate with the
harm suffered[,]” both parties having “paid counsel to brief the court before the Judicial Settlement
Conference.” Id. at 5.
Carrington does not stand for the proposition that sanctions are not awardable in this case.
In Carrington, the court had already determined that an award of sanctions was appropriate and,
accordingly, focused solely on the calculation of the sum to be awarded. See Carrington, 2019
WL 1373647, at *1-2. In any event, any differences between the conduct sanctioned in Carrington
and that at issue here have little bearing on the merits of the instant motion.
Even accepting that US Bank mistakenly failed to send its representative in person to the
settlement conference, its approach to the July 11, 2019, settlement conference, including its tardy

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in camera submission and its notification to the court on the morning of that conference that no
representative would personally appear, bespeaks a dismissive attitude toward this court’s vital
judicially-mediated settlement conference process. Conduct need not be intentional, or undertaken
in bad faith, to be sanctionable pursuant to Rule 16(f). See, e.g., Negron, 173 F. App’x at 79
(imposing sanctions when, although “the Hospital was free to adopt a ‘no pay’ position, its failure
to bring a principal party was a violation of a court order and impaired the usefulness of the
mediation conference”); Marco Crane & Rigging Co. v. Greenfield Prods. LLC, No. CV-1701836-PHX-GMS, 2019 WL 5066823, at *4 (D. Ariz. Oct. 9, 2019) (observing that, “[b]ecause
part of the purpose of the sanctioning power is to control litigation and preserve the integrity of
the judicial process, sanctions are not only appropriate when the disobedience is intentional but
may also be imposed when the disobedience is unintentional.”) (citation and internal punctuation
omitted).
As First American correctly observes, “The primary purpose of a Judicial [S]ettlement
Conference is to bring the parties together face-to-face in a controlled environment where they can
focus all of their attention on resolving their dispute.” First American’s Reply in Support of Its
Motion for Sanctions (“Reply”) (ECF No. 72) at [1]. First American correctly argues that this
purpose was “frustrated” by US Bank’s failure to send a representative with full authority to settle
this matter to the July 11, 2019, settlement conference, as a result of which “[w]e will never know
if this case would have settled if Mr. Montoya had come to Maine with full settlement authority[.]”
Id.; see also, e.g., Marco Crane, 2019 WL 5066823, at *4-5 (observing that “[f]or settlement to be
possible, both parties must arrive at the settlement conference with an open mind and a genuine
willingness to meaningfully discuss the strengths and weaknesses of each party’s case”; noting
that “[s]anctions are appropriate under Rule 16(f) when the parties fail to insure an individual with

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settlement authority attends the settlement conference” and that “telephonic availability is not
sufficient to warrant good faith participation in the settlement conference – nor does it constitute
attendance at a settlement conference”). US Bank’s violations of the court’s May 23, 2019, order,
hence, warrant the imposition of sanctions.
US Bank correctly notes that any sanctions for violation of the court’s settlementconference order should be “commensurate with the harm suffered.” Objection at 5; Fed. R. Civ.
P. 16(f)(2) (“[T]he court must order the party, its attorney, or both to pay the reasonable expenses
– including attorney’s fees – incurred because of any noncompliance with this rule, unless the
noncompliance was substantially justified or other circumstances make an award of expenses
unjust.”).
However, the harm suffered by First American is not limited to the out-of-pocket costs of
sending its representative to Portland, Maine, as US Bank contends. See Objection at 5. First
American also incurred attorney fees to prepare for, and participate in, a settlement conference that
had no reasonable chance of success, as well as to prepare the instant motion for sanctions. See
Motion at 3. US Bank has not shown that its noncompliance was substantially justified or that
other circumstances make an award of expenses unjust.
First American has submitted a detailed accounting of the hours its attorneys spent on each
entry of work, their billable rates, and Mr. Ferro’s out-of-pocket costs incurred in traveling to
Portland, Maine, for the settlement conference. See generally Bill of Costs. This accounting
reflects attorney fees totaling $4,634.10 for preparing First American’s in camera position paper,
$4,365.90 for preparing for the settlement conference, $1,447.65 for participating in the settlement
conference, and $2,566.35 for preparing the instant motion for sanctions, as well as $1,304.82 in
travel costs for Mr. Ferro. See id. at 1-3. US Bank does not challenge either First American’s

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accounting or the reasonableness of those fees and costs. See generally Objection. In any event,
I independently find that First American’s accounting is accurate and that the fees and costs it
seeks are reasonable.2 Hence, I award sanctions against US Bank, and in favor of First American,
in the requested sum of $14,318.82.
IV. Conclusion
For the foregoing reasons, I GRANT First American’s motion for sanctions against US
Bank in the sum of $14,318.82, representing attorney fees and costs needlessly incurred by First
American when US Bank’s violations of the court’s May 23, 2019, order undermined the
effectiveness of the parties’ July 11, 2019, judicial settlement conference.
NOTICE
In accordance with Federal Rule of Civil Procedure 72(a), a party may serve and file an
objection to this order within fourteen (14) days after being served with a copy thereof.
Failure to file a timely objection shall constitute a waiver of the right to review by the

district court and to any further appeal of this order.
Dated this 18th day of November, 2019.
John H. Rich III
John H. Rich III
United States Magistrate Judge

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In time entries for June 13, 14, and 19, 2019, Attorney Glenn Israel did not differentiate between time spent working
on the in camera filing and time spent on unrelated aspects of this case. See Bill of Costs at 5. However, in itemizing
its costs, First American allocated portions of the time billed for Attorney Israel’s work on those three days to the in
camera filing, compare id. at 1 with id. at 5, and did not seek fees for an unspecified portion of 2.0 hours Attorney
Israel spent on that filing on June 20, 2019, or of 3.5 hours he spent on that filing on June 26, 2019, compare id. at 1
with id. at 5-6. Thus, I am satisfied that the accounting overall is accurate and reasonable.

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