According to Judge Martin, the following behavior by First Weber Group Inc. counsel was not bad enough to impose sanctions under either Rule 11 or sec. 1927.
IN RE HORSFALL
Case No. 10-12596, Adv. No. 10-00179.
First Weber Group, Inc., Plaintiff, v. Jonathan H. Horsfall, Defendant.
United States Bankruptcy Court, W.D. Wisconsin.
-------------------------------ROBERT D. MARTIN, Bankruptcy Judge presiding.
MEMORANDUM DECISION November 17, 2011.
The facts of the underlying dispute are set out in my Memorandum Decision, First Weber Group, Inc. v. Jonathan H. Horsfall, Case No. 10-00179 (April 26, 2011). While they provide useful background, they are not the basis of the present motions.
Throughout the trial, Attorney Moermond, counsel for First Weber, fn1 asked redundant questions that were objected to as irrelevant. Nearly all the objections were sustained. Mr. Moermond was given numerous directives to limit the scope of his questions to the issue at trial, which he consistently failed to heed. He doggedly repeated his irrelevant questions. He frequently rolled his eyes. Though not fully audible, nor recorded, he made constant sotto voce comments (some vulgar) during the trial, which were heard by court staff and visitors to the courtroom. Attorney Moermond's conduct was rude, petulant, immature and disrespectful.
Rule 11 motions are intended to "deter unnecessary filings, prevent the assertion of frivolous pleadings, and require good faith filings," In re Firnhaber, 2004 WL 2211686 at 3. In this case, the defendant does offer some evidence to establish that First Weber commenced this action for an improper purpose. But that evidence is scant, and a creditor's reasons for seeking to have a debt declared non-dischargeable in bankruptcy are generally self-evident. The defendant provides little evidence that First Weber filed the adversary proceeding without an adequate inquiry into the facts and the law. Though the defendant argues that First Weber's alleged lack of economic motive can only mean that the original complaint was filed for an improper purpose, no authority supports this reason alone as a basis for Rule 11 sanctions. The defendant's oral argument and subsequently filed brief also fail to point to specific evidence of filing for an improper purpose. First Weber's case was weak, but that in itself is not enough to establish an improper purpose on the part of First Weber. Therefore, Rule 11 sanctions are not appropriate.
Still, one could infer that First Weber did not do an adequate inquiry into the facts to support a "willful and malicious" injury under § 523(a)(6) before it commenced its adversary proceeding. Based on Attorney Moermond's Original Complaint and appellant brief, it appears that First Weber believed it would prevail on its motion for summary judgment based on the circuit court judgment that found the defendant liable for tortious interference with contract. The Original Complaint states § 523(a)(6) as a cause of action for non-dischargeability, and it appears to rely heavily on the circuit court judgment as a basis for willful and malicious injury. Had Attorney Moermond done a more thorough search into the underlying law, it may have been clear that the case for willful and malicious injury was very weak. This inference may support the conclusion that First Weber did not adequately inquire whether it had a basis in law in fact before it initiated the adversary proceeding, but it also in part refutes the defendant's argument that the complaint was filed simply to harass the defendant. First Weber believed that it would prevail on its motion for summary judgment. Because these are tenuous inferences, the facts as they stand do not support that the pleadings were frivolous or filed for an improper purpose.
Finally, Attorney Moermond's conduct at trial may have been truculent and disrespectful and his competence in the courtroom inadequate, but this does not rise to the level of inappropriateness that would warrant sanctions. His conduct was of the sort that is usually censured by social mores and discouraged by public (or private) embarrassment, not by legal sanctions. It is remarkable that neither he nor his client (a firm seemingly dependent on favorable public image) were not sufficiently self-controlled nor embarrassed enough to modify the shameful performance. Unlike the Rule 37 case described above, Attorney Moermond was not yelling at the court and blatantly disobeying direct orders from the court. His inappropriate behavior, while reprehensible, is not enough to trigger Rule 9011 sanctions.
In this case, Attorney Moermond unreasonably prolonged the trial by repeatedly asking irrelevant questions despite the Federal Rules of Evidence and the court's directives. This caused countless objections and delays throughout the trial. However, prolonging a trial is not the same as vexatiously multiplying proceedings, and therefore, this alone does not warrant sanctions under § 1927. Attorney Moermond also questioned the court's ruling on the objections, and argued after being told to move on to another question. He also made many sotto voce comments and behaved in a disrespectful manner. This conduct may constitute "contempt for the law, the court, and opposing counsel." Given his unprofessional conduct and flagrant disregard for the Federal Rules of Evidence, there may be a basis to impose § 1927 sanctions. However, in the aggregate, his conduct does not fall squarely within the type that § 1927 is trying to prevent. Weighing the circumstances as a whole, sanctions are not appropriate in this case.
While the conduct in this case does not warrant sanctions, the attorneys must be reminded to observe the Seventh Circuit's Standards for Professional Conduct.fn3
For the reasons outlined above, both motions for sanctions are DENIED. It will be so ordered.
1. Mr. Moermond appears to be general counsel or in-house counsel for First Weber, and as such, an employee of First Weber.
2. The language of Federal Rule of Civil Procedure 11 is virtually identical to Rule 9011. In re Victoria, 1993 U.S. Dist. LEXIS 20803 (E.D. Wis. June 9, 1993).
3. Standards for Professional Conduct Within the Seventh Federal Judicial Circuit available at: http://www.ca7.uscourts.gov/rules/rules.htm.