Valhalla Investment Properties, LLC v. 502, LLC et al
Filing
103
MEMORANDUM OPINION OF THE COURT. Signed by Chief Judge Waverly D. Crenshaw, Jr on 3/29/2021. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(jm)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
VALHALLA INVESTMENT
PROPERTIES, LLC,
Plaintiff,
v.
502, LLC,
WILLIAM E. KANTZ, JR. and
JOHN BRADFIELD SCARBROUGH,
Defendants.
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NO. 3:19-cv-00318
MEMORANDUM ORDER
Defendants 502, LLC; William E. Kantz, Jr.; and John Bradfield Scarbrough have filed a
motion seeking an award of attorney’s fees under 28 U.S.C. § 1927 as a sanction for the alleged
misconduct of counsel for Plaintiff Valhalla Investment Properties, LLC. 1 (Doc. No. 87.) Valhalla
has responded in opposition (Doc. No. 94), and Defendants have filed a reply (Doc. No. 95). For
the following reasons, Defendants’ motion will be denied without prejudice.
I.
Legal Standard
Section 1927 provides district courts with discretion to sanction any attorney “who so
multiplies the proceedings in any case unreasonably and vexatiously” by requiring the attorney “to
satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of
such conduct.” 28 U.S.C. § 1927. The Sixth Circuit has held that courts may exercise this
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Defendants nominally invoke Federal Rule of Civil Procedure 54 and this Court’s Local
Rule 54.01 in their motion (Doc. No. 87). Because Defendants’ memorandum of law addresses
only 28 U.S.C. § 1927, the Court limits its analysis to that statute.
discretion “even in the absence of any ‘conscious impropriety.’” Hall v. Liberty Life Assurance
Co. of Boston, 595 F.3d 270, 275 (6th Cir. 2010) (quoting Rentz v. Dynasty Apparel Indus., Inc.,
556 F.3d 389, 396 (6th Cir. 2009)). Accordingly, “[t]he lawyer need not have ‘subjective bad faith’
but must act with ‘something more than negligence or incompetence.’” Carter v. Hickory
Healthcare Inc., 905 F.3d 963, 968 (6th Cir. 2018) (quoting Red Carpet Studios Div. of Source
Advantage, Ltd. v. Sater, 465 F.3d 642, 646 (6th Cir. 2006) (Red Carpet Studios)). The inquiry is
“whether ‘an attorney knows or reasonably should know that a claim pursued is frivolous, or that
his or her litigation tactics will needlessly obstruct the litigation of nonfrivolous claims[,]’” Hall,
595 F.3d at 275–76, and whether the attorney’s conduct therefore “falls short of the obligations
owed by a member of the bar to the court[,]” Carter, 905 F.3d at 968 (quoting Red Carpet Studios,
465 F.3d at 646). The purpose of § 1927 “is to deter dilatory litigation practices and to punish
aggressive tactics that far exceed zealous advocacy.” Red Carpet Studios, 465 F.3d at 646.
II.
Analysis
In one of the first orders issued in this case, the Court found that
[b]oth parties’ briefs regarding Valhalla’s motion contain language directed at
opposing counsel that is inflammatory, unprofessional and unwarranted. There is a
line between “[v]igorous representation” and “ad hominem insults addressed to . .
. opposing counsel[,]” and the parties are in danger of crossing it here. United States
v. Houston, 205 F. Supp. 2d 856, 876 (W.D. Tenn. 2002). This case is in its earliest
stages, and the Court expects that, going forward, all counsel will conduct
themselves with the courtesy and civility required of them as members of its Bar.
(Doc. No. 20, PageID# 337.)
Several months later, the Court was forced to remind the parties “that this Court is not a
forum for the airing of personal disputes. All filings shall address the merits of the litigation only.”
(Doc. No. 47, PageID# 869.) And so it continued until the Court dismissed this action between
“former business partners whose relationship has soured, and who have subsequently learned to
hate each other.” (Doc. No. 81, PageID# 1499.) Now, Defendants move for sanctions under 28
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U.S.C. § 1927 against Scott D. Johannessen, Valhalla’s counsel, its sole corporate member, and
Defendants’ former business partner in the ill-fated real estate venture that spawned this case.
Defendants’ motion is not without foundation in the record. The Court has previously
deemed Johannessen’s filings “verbose and invective-laden.” (Doc. No. 81, PageID# 1499.)
“Operatic” would also have been apt. Certainly, Johannessen’s approach to this litigation has
increased the number of pages in the docket exponentially. But the Court returns to its initial
characterization of this litigation as a business deal gone bad. While Johannessen has been far
more prolific in broadcasting it, the ill will in this case has been apparent on all sides. Accordingly,
the Court finds, in its discretion, that the sanction of fees against Johannessen under § 1927 is not
warranted.
One coda is required: The Court is extremely troubled by Johannessen’s characterization
of this case in his response in opposition to Defendants’ motion as “in its nascent stages,” going
on to assert that “Defendants have not successfully challenged with competent evidence the
underlying facts of Valhalla’s case or its several claims. Valhalla’s substantive claims remain
inviolate.” (Doc. No. 94, PageID# 1596.) That assertion is confounding. This case is finished. Final
judgment has been entered. (Doc. No. 83.) That judgment has been affirmed on appeal. (Doc. Nos.
92, 93.) Accordingly, should Johannessen try to reanimate the corpse of this action, ignoring what
the Sixth Circuit has made clear—“No natural person, no FDCPA protection. In short, no relief.”
(Doc. No. 92, PageID# 1588)—Defendants may move to reopen the case and refile their motion.
Until such time—which the Court fervently hopes does not arrive—may this action rest in peace.
Defendants motion for sanctions under 28 U.S.C. § 1927 is denied without prejudice to
being raised if warranted as set out above.
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An appropriate order will be entered.
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WAVERLY D. CRENSHAW, JR.
Chief United States District Judge
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