Hiles v. NovaStar Mortgage, Inc. et al

Filing 70

ORDER: (1) GRANTING IN PART AND DENYING IN PART THE NOVASTAR DEFENDANTS' MOTION FOR SANCTIONS AND AN INJUNCTION (Doc. 53 ); AND (2) DENYING PLAINTIFF'S MOTION TO STAY (Doc. 55 ). Plaintiff is ENJOINED and prohibited from filing any additional motions in this case without leave of Court. Signed by Judge Timothy S. Black on 2/5/2016. (mr)(This document has been sent by regular mail to the party(ies) listed in the NEF that did not receive electronic notification.)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
MARSHALL G. HILES, individually and
as assignee of the claims of Nathan and
Brittney Honis,

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Plaintiff,
vs.
NOVASTAR MORTGAGE, et al.,
Defendants.

Case No. 1:12-cv-392
Judge Timothy S. Black

ORDER: (1) GRANTING IN PART AND DENYING IN PART THE NOVASTAR
DEFENDANTS’ MOTION FOR SANCTIONS AND AN INJUNCTION (Doc. 53);
AND (2) DENYING PLAINTIFF’S MOTION TO STAY (Doc. 55)
This civil action is before the Court on: (1) The NovaStar Defendants’ motion for
sanctions and an injunction (Doc. 53) and the parties’ responsive memoranda (Docs. 56,
58, 63); and (2) Plaintiff’s motion to stay (Doc. 55) and the parties’ responsive
memoranda (Docs. 64, 65, 67, 69). ’ 1
I.

PROCEDURAL POSTURE

This civil action was removed to the Southern District of Ohio on May 22, 2012.
(Doc. 1). NovaStar Defendants moved to dismiss the complaint on June 19, 2012. After
the matter was fully briefed, on October 10, 2012, this Court issued an 18-page Order that
terminated the case. (Doc. 25).

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The “NovaStar Defendants” include: NovaStar Mortgage, Inc., Novation Companies, Inc.,
formerly known as NovaStar Financial, Inc., and Zurich American Insurance Company
(collectively “NovaStar Defendants”).
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Proceeding pro se, Plaintiff filed a notice of appeal on December 10, 2012. (Doc.
30). During the pendency of the Sixth Circuit appeal, Plaintiff moved the District Court
to admit evidence, post-judgment. (Doc. 31). On February 8, 2013, this Court denied the
motion to admit evidence. (2/8/2013 Notation Order). After the parties briefed the
appellate issues, the Sixth Circuit affirmed this Court’s dismissal on January 13, 2014.
Hiles v. NovaStar Mortg., Inc., No. 12-4527, Slip. Op. (6th Cir. Jan. 13, 2014).
Following the Sixth Circuit’s decision, Plaintiff filed a petition for an en banc hearing.
(App. Doc. 54). The en banc petition was denied on May 6, 2014. (App. Doc. 55).
On May 15, 2015, Plaintiff filed a Motion to Vacate Judgment, which simply
restated the arguments that the Sixth Circuit rejected on appeal, including reference to
recusal of the District Judge. (Doc. 38). On July 27, 2015, the Court denied Plaintiff’s
Motion to Vacate on multiple grounds: (1) untimeliness; (2) failure to “provide clear and
convincing evidence that the judgment should be vacated, particularly where these same
arguments were previously presented to the Sixth Circuit and found to be an insufficient
basis for reversal” (Doc. 46 at 5); and (3) failure to prove fraud on the court by clear and
convincing evidence. Following the Court’s Order denying the Motion to Vacate,
Plaintiff moved to recuse Judge Black (Doc. 47) and moved for reconsideration of the
denial of the Motion to Vacate (Doc. 48). These motions regurgitated the same
arguments that both this Court and the Sixth Circuit were denied. (Doc. 69).
In response to Plaintiff’s motions for recusal and reconsideration, counsel for
NovaStar Defendants wrote a letter to Plaintiff to notify him of his obligations under Rule
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11 of the Federal Rules of Civil Procedure. (Doc. 53, Ex. B). In this letter, counsel
identified Rule 11 and explained how Plaintiff’s most recent motions violated the rule
regarding needlessly expending legal resources and harassing the NovaStar Defendants
with repetitive motions lacking any legal basis. (Id.) Plaintiff was asked to withdraw the
motions by August 21, 2015 or the NovaStar Defendants would seek appropriate
remedies from this Court. In a letter dated August 12, 2015, Plaintiff refused to withdraw
his motions to recuse and for reconsideration. (Doc. 53, Ex. C).
On August 18, 2015, the NovaStar Defendants served Plaintiff with this Motion
for Sanctions and an Injunction and formally requested that Plaintiff withdraw the
motions. (Doc. 53, Ex. D). Plaintiff again refused to withdraw the motions and
threatened to continue pursuing litigation against the NovaStar Defendants. (Id., Ex. E).
II.
A.

ANALYSIS

Motion to Stay

“A stay in a civil case is an extraordinary remedy that should be granted only
when justice so requires.” McCloskey v. White, No. 3:09cv1273, 2011 U.S. Dist. LEXIS
19877, at *1 (N.D. Ohio 2011). “The power to stay proceedings is incidental to the
power inherent in every court to control the disposition of the causes in its docket with
economy of time and effort for itself, for counsel, and for litigants, and the entry of such
an order ordinarily rests with the sound discretion of the District Court.’” Fed. Trade
Comm’n v. E.M.A. Nationwide, Inc., 767 F.3d 611, 627 (6th Cir. 2014).

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The party seeking a stay of proceedings has the burden of establishing both the
“pressing need for delay” and “that neither the other party nor the public will suffer harm
from entry of the order.” Ohio Envtl. Council v. United States Dist. Court, S. Dist. of
Ohio, E. Div., 565 F.2d 393, 396 (6th Cir. 1977). In determining whether or not to grant
a stay of proceedings, a court may consider the following factors: “[1] the potentiality of
another case having a dispositive effect on the case to be stayed, [2] the judicial economy
to be saved by waiting on a dispositive decision, [3] the public welfare, and [4] the
hardship/prejudice to the party opposing the stay, given its duration.” Michael v. Ghee,
325 F. Supp.2d 829, 831 (N.D. Ohio 2004).
After the NovaStar Defendants filed a motion for sanctions and an injunction,
Plaintiff filed a motion to stay (Doc. 55), seeking to stay this lawsuit pending the
resolution of a Petition for Writ of Prohibition and Mandamus filed in an unrelated case
— Hiles v. Army Review Board, Case No. 12-cv-673 (S.D. Ohio). Neither the NovaStar
Defendants nor the Deutsche Bank are parties to that case. The only relationship between
the two cases is that both are assigned to this Judge and Mr. Hiles is the Plaintiff in both
cases.
This lawsuit was dismissed three years ago and the Sixth Circuit affirmed that
dismissal almost two years ago. A stay at this point would be inappropriate given the
procedural history of this case and would cause further unnecessary expense for the
NovaStar Defendants. Accordingly, Plaintiff has failed to meet his burden to establish
the necessity of a stay.
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B.

Motion for Sanctions

The NovaStar Defendants argue that Plaintiff continues to file frivolous motions
that seek to re-litigate issues that have long since been resolved both by this Court and the
Sixth Circuit Court of Appeals. Accordingly, the NovaStar Defendants seek sanctions,
their fees and costs in preparing this Motion and opposing Plaintiff’s frivolous motions,
and an Order enjoining Plaintiff from filing any new motions without first seeking and
receiving leave of Court.
Federal Rule of Civil Procedure 11 gives the Court the power to impose sanctions
on parties, attorneys, and law firms. Fed. R. Civ. P. 11(c)(1). Rule 11 states four
grounds for imposing sanctions, but only two are relevant to the motion currently before
this Court. Rule 11(b) states:
By presenting to the court a pleading, written motion, or other paper
…an attorney or unrepresented party certifies that to the best of the
person’s knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances:
(1) it is not being presented for an improper purpose, such as to
harass, cause unnecessary delay, or needlessly increase the
cost of litigation;
(2) the claims, defenses, and other legal contentions are
warranted by existing law or by a nonfrivolous argument for
extending, modifying, or reversing existing law or for
establishing new law
Rule 11 authorizes a federal court to impose sanctions when a litigant multiplies the
proceedings in a claim unreasonably and vexatiously. Sanctions under Rule 11 are
intended to deter abuse of the legal process. Merritt v. Int’l Ass’n of Machinists &
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Aerospace Workers, 613 F.3d 609, 626 (6th Cir. 2010). 2 The remedial purpose of Rule
11 is to require attorneys, as well as pro se litigants, to “stop, look, and listen” before
instituting a lawsuit or submitting a filing to the court. Schmidt v. Nat’l City Corp.,
3:06cv209, 2008 U.S. Dist. LEXIS 118202, at *4 (E.D. Tenn. Aug. 26, 2008). 3
Given Plaintiff’s status as a pro se litigant, the Court declines to impose sanctions
at this time. However, Plaintiff is now on notice. Moving forward, Plaintiff’s pro se
status is not an excuse for wasting the Court’s limited resources and depriving other
litigants from the speedy resolution of their cases. Plaintiff is cautioned that this Court
will impose Rule 11 sanctions for future abuses.
The NovaStar Defendants also argue that Plaintiff should be enjoined from filing
any additional motions in this matter without first obtaining leave of court. Plaintiff has
advanced the same arguments as a basis for reviving his suit five times since the Court
dismissed the lawsuit in 2012: (1) the Sixth Circuit appeal; (2) the en banc petition;
(3) the motion to vacate; (4) the motion to recuse; and (5) the motion for reconsideration.
“An injunction is proper against a litigant who has abused the court system by using it to
relitigate claims arising from the same factual circumstances or to harass his opponents.”
Sassower v. Thompson, Hine & Flory, No. 92-3553, 1993 U.S. App. LEXIS 5466, at *7
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See, e.g., Tahfs v. Proctor, 316 F.3d 584, 594 (6th Cir. 2003) (“The central purpose of Rule 11
is to deter baseless filings in district court.”).
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See also Smiley v. Gov’t Seal, No. 1:14cv191, 2014 U.S. Dist. LEXIS 33746, at *2 (S.D. Ohio
Mar. 13, 2014) (pro se parties are subject to Rule 11); Farguson v. MBank Houston, N.A., 808
F.2d 358, 359 (5th Cir. 1986) (“[P]ro se filings do not serve as an impenetrable shield [from the
application of Rule 11], for one acting pro se has no license to harass others, clog the judicial
machinery with meritless litigation, and abuse already overloaded court dockets.”).
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(6th Cir. Mar. 4, 1993). Each time Plaintiff files another frivolous motion, the NovaStar
Defendants are required to expend resources on a case that was terminated years ago.
This Court has ruled and the Sixth Circuit has affirmed that this matter is barred by the
doctrine of res judicata. (Doc. 25 at 17; App. Doc. 51-2 at 4-5). There is “nothing
unusual about imposing prefiling restrictions in matters with a history of repetitive or
vexatious litigation.” Feathers v. Chevon U.S.A., Inc., 141 F.3d 264, 269 (6th Cir. 1998).
While the Court gives some deference to pro se litigants, it will not permit any
litigant to use the Court’s resources to address filings clearly designed to harass the Court
or opposing counsel. Federal courts have both the inherent power and constitutional
obligation to protect their jurisdiction from conduct which impairs their ability to carry
out Article III functions. Procup v. Strickland, 792 F.2d 1069, 1073 (11th Cir. 1986). To
achieve these ends, the Sixth Circuit has approved enjoining vexatious and harassing
litigants by requiring them to obtain leave of court before submitting additional filings.
Filipas v. Lemons, 835 F.2d 1145, 1146 (6th Cir. 1987). Therefore, Plaintiff must seek
leave of Court before submitting any additional filings in this case.
III.

CONCLUSION

Accordingly, for the reasons stated in this Order:
(1)

Plaintiff’s motion to stay (Doc. 55) is DENIED;

(2)

The NovaStar Defendants’ motion for sanctions and an injunction (Doc. 53) is
GRANTED IN PART and DENIED IN PART as explained in this Order; and

(3)

Plaintiff is ENJOINED and prohibited from filing any additional motions in this
case without leave of Court.
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IT IS SO ORDERED.
Date: 2/5/16

s/ Timothy S. Black
Timothy S. Black
United States District Judge

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