Ryder as Receiver v. Bates et al

Filing 50

ORDER denying 41 Motion for Sanctions. Signed by Magistrate Judge Charmiane G. Claxton on 1/20/2016. (Claxton, Charmiane)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
Western Division
JOHN L. RYDER, Reciever for
FIRST AMERICAN MONETARY
CONSULTANTS, INC., FAMC PM, LLC
And INFORMATION RADIO NETWORK,

VS.

LARRY C. BATES, BARBARA B. BATES
CHARLES E. BATES, ROBERT L. BATES
and KINSEY B. BATES,
Defendants

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No. 2:15-cv-2526-JPM-cgc

ORDER DENYING RECIEVER’S MOTION FOR SANCTIONS AGAINST
DEFENDANTS LARRY BATES AND BARBARA BATES
Before the Court, by way of Order of Reference (D.E. # 42) is the December 9, 2015
Motion for Sanctions Against Defendants Larry Bates and Barbara Bates filed by the Receiver.
For the following reasons, the motion is DENIED.
The Receiver moves for sanctions against Defendants Larry Bates and Barbara Bates
pursuant to Fed. R. Civ. P. 11(b) and 12 and 28 U.S.C.§ 1927 and the Court’s inherent authority
for persisting in filing documents with the court which do not address the issue at hand, repeat
arguments that have been dismissed.
On November 10, 2015, counsel for the Receiver sent a safe harbor letter to Larry Bates
and Barbara Bates urging the Bares to cease repeating arguments regarding the pre-judgment
attachment such as those made in 2:11-cv-1396 at D.E. # 513, 514, 521, 530, 531 and 548 and
filings that “impugn the integrity of the Receiver, his counsel and Plaintiffs’ counsel.” (2:11-cv-

1369, D.E. # 549, Exhibit A). Despite this warning, Larry Bates and Barbara Bates filed at D.E.
# 40 a document styled “Response of Defendants Larry Bates and Barbara Bates to Court’s
Order to Respond under Rule 8(b) and Motion to Return Property to Defendants Due to
Unlawful Attachment.” The Receiver requests that the document filed at D.E. # 40 be stricken
as redundant, immaterial, impertinent and scandalous as it reiterates allegations made against the
Receiver and arguments made in filings in Orlowski et al v. Bates et al, 2:11-cv-1396-JPM-cgc.
A hearing on this motion was held on January 11, 2016 after notice to the parties. In attendance
were Laura Martin, counsel for the Receiver, Amber Griffin Shaw, counsel for the Plaintiffs,
Larry Bates, pro se Defendant and Barbara Bates, pro se Defendant.
On September 29, 2015, Larry Bates and Barbara Bates filed a document styled
“Defendants Larry Bates and Barbara Bates Response to the Receiver’s First Complaint and
Response to Receiver’s Motion for Default Judgement (sic) and a Motion by Defendants Larry
Bates and Barbara Bates to Dismiss Prejudgement (sic) Attachment Orders of August 6, 2015
and August 7, 2015 and for Sanctions Against Receiver and Receiver’s Law Firm , Amber Shaw
and Her Law Firm.” (D.E. # 27). Upon motion of the Receiver, U.S. District Judge McCalla
entered an order striking D.E. # 27, finding that the Bates’ “assertion that they have been denied
access to their records … is unsupported by any of the facts alleged in their filing,” that the
Bates’ allegations focusing on the behavior of the parties and attorneys in the Orlowski case are
“irrelevant, immaterial and impertinent to the instant matter” and that “based on the Court’s
previous determination that these allegations are unfounded, their reassertion in the instant
matter is unfairly prejudicial to the Receiver.” (D.E. # 38, pages 5-6)

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Despite the clear order of Judge McCalla, Larry Bates and Barbara Bates persist in
repeating the arguments about an inability to access documents and making untoward comments
about the Receiver, his counsel and Plaintiffs’ counsel 1 For example, in docket entry 27, Larry
Bates and Barbara Bates state
“Since said seizure, Defendants have been denied access to their records and files
necessary to properly answer Receiver’s motions and defend against other
actions filed in this Court.”
In docket entry 40, Larry Bates and Barbara Bates state
“On August 10, 2015, Ryder and plaintiffs attorneys served those unlawful orders
with the assistance of the US Marshal’s service, and defendants Larry Bates and
Barbara Bates were removed from their home and left with the clothes on their
backs and have been denied access to their records and personal papers including
legal files and records necessary to defend against the pending court actions. …
To the date of this filing, Defendants Larry Bates and Barbara Bates have been
proceeding without counsel and are proceeding pro se. The Court has directed the
Defendants to do the impossible by ordering a response under 8(b) FRCP by
December 8, 2015, when this Court has refused them access to their personal
papers, records and legal files to comply with such a directive.”
(emphasis added in both excerpts) Continuing this argument flies directly contrary to District
Judge McCalla’s Order.
Title 28 United States Code section 1927 provides that any attorney practicing before the
district court who engages in conduct that unreasonably and vexatiously multiplies the
proceedings in a case may personally be required to pay excess costs, expenses and attorneys’
fees that were incurred because of the conduct. To impose liability under the statute, there must
be bad faith, and the conduct must be egregious. Also, by the clear language of the statute, the

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Larry Bates and Barbara Bates also repeated the argument regarding the pre-judgment attachment in D.E. # 40. At
the December 14, 2015 hearing in the Orlowski case regarding the Motion of Receiver for Contempt and Sanctions
(D.E. # 512), District Judge McCalla entertained and took under advisement the issue raised by Larry Bates
regarding the pre-judgment attachment. As such, the undersigned will not address the propriety of that argument
with regard to this motion.

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penalty is to be applied to “an attorney”. As Larry Bates and Barbara Bates are proceeding pro
se, the statute would not apply to them. See, Li v. Recellular, Inc., 2010 WL 15236379, *8 (E.D.
Mich. April 16, 2010).
A second basis for sanctions offered is Fed. R. Civ. P. 11(b) which provides that:
“By presenting to the court a pleading, written motion, or other paper—whether
by signing, filing, submitting, or later advocating it—an attorney or unrepresented
party (emphasis added) 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 any 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;
(3) the factual contentions have evidentiary support or, if specifically so
identified, will likely have evidentiary support after a reasonable
opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if
specifically so identified, are reasonably based on belief or a lack of
information.
When deciding whether to impose Rule 11 sanctions, courts are directed by the Sixth Circuit to
consider “whether an individual’s conduct was reasonable under the circumstances.” Union
Planters Bank v. L & J Dev. Co., 115 F.3d 378, 384 (6th Cir. 1997). The Advisory Committee
Notes for the rule lists factors for the court to consider when deciding whether or not to impose
sanctions. The factors include,
Whether the improper conduct was willful, or negligent; whether it was part of a
pattern of activity, or an isolated event; whether it infected the entire pleading, or
only one particular count or defense; whether the person has engaged in similar
conduct in other litigation; whether it was intended to injure; what effect it had on
the litigation process in time or expense; whether the responsible person is trained
in the law; what amount, given the financial resources of the responsible person,
is needed to deter that person from repetition in the same case; what amount is
needed to deter similar activity by other litigants.

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At this point, the actions taken by Larry Bates and Barbara Bates do not appear to rise to
the level of egregiousness as contemplated by the Rule. However, Larry Bates and Barbara
Bates are counseled that their filings in this case are to be focused on either supporting whatever
motion they are filing or on responding directly to the specific matters addressed in the motion
that they are responding to. As the District Court has already ruled with regard to the conduct of
the Receiver, his counsel and Plaintiffs’ counsel in this case, further comment along those lines
may be deemed irrelevant, impertinent and immaterial and may subject Larry Bates and Barbara
Bates to sanctions for disregard of the Court’s orders and violation of the rules of civil
procedure.

IT IS SO ORDERED this 20th day of January, 2016.

s/Charmiane G. Claxton
CHARMIANE G. CLAXTON
UNITED STATES MAGISTRATE JUDGE

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