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Media Alerts - Kaass Law v. Wells Fargo Bank, N.A. - Ninth Circuit
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October 23, 2015
  Kaass Law v. Wells Fargo Bank, N.A. - Ninth Circuit
Kaass Law v. Wells Fargo Bank, N.A. - Ninth Circuit

Headline: Law Firms are not sanctionable under 28 U.S.C. § 1927.

Areas of Law: Civil Procedure, 28 U.S.C. § 1927 Sanctions

Issue Presented: Whether 28 U.S.C. § 1927 can apply to a law firm rather then an individual as the statute reads.

Brief Summary:
An attorney with Kaass Law filed a complaint on behalf of a client against 10 different defendants, including Wells Fargo Bank, claiming the banks reported certain adverse information to credit agencies who then reflected the adverse information in Plaintiff's credit report. After the district court dismissed the complaint against Wells Fargo, the bank filed a motion to recover $11,236.50 in attorneys' fees and costs from Kaass Law and the client (the named Plaintiff), pursuant to 28 U.S.C. § 1927. Wells Fargo contended that Kaass Law's "litigation conduct undoubtedly 'multipl[ied] the proceedings in any case unreasonably and vexatiously' thereby constituting bad faith." The district court then awarded sanctions pursuant to 28 U.S.C. § 1927. The Ninth Circuit panel reversed the award, holding that law firms cannot be sanctioned based on the plain language of the statute which only specifies "individuals."

Extended Summary:
Armen Kiramijyan, an attorney with Kaass Law, filed a complaint on behalf of Plaintiff Izabell Manukyan against 10 different defendants, including Wells Fargo Bank, claiming the banks reported certain adverse information to credit agencies who then reflected the adverse information in Plaintiff's credit report. The district court granted Wells Fargo's motion to dismiss.

After the judgment dismissing Wells Fargo from the action, Wells Fargo filed a motion to recover $11,233.50 in attorney's fees and costs from Kaass Law pursuant to 28 U.S.C. § 1927 contending that that Kaass Law's "litigation conduct undoubtedly 'multipl[ied] the proceedings in any case unreasonably and vexatiously' thereby constituting bad faith." Wells Fargo specifically argued that Kaass Law acted in bad faith by: 1) filing a complaint and amended complaint that failed to differentiate Wells Fargo from the other defendants, and failed to provide factual allegations identifying the inaccurate
information; 2) failing to communicate its intent to file a motion for leave to amend, and then filing a motion for leave to amend the day after Wells Fargo filed a motion to dismiss; 3) failing to oppose Wells Fargo's motion to dismiss; 4) and engaging in a pattern and practice of filing similar "canned" and "boilerplate" complaints, in the same manner as Kaass Law's "predecessor," attorney Arshak Bartoumian, had done.

While the district court declined to award fees against the Plaintiff (the client, Izabell Manukyan), it ruled that "Kaass Law acted in bad faith by knowingly raising frivolous arguments against Wells Fargo and other defendants," and granted the motion against Kaass Law. The district court found that "Wells Fargo provides sufficient evidence that Kaass Law acted in bad faith," including "its failure to plead specific allegations or
differentiate between defendants in the Complaint; its failure to oppose defendants' motions to dismiss; and its failure to meet and confer or communicate with opposing counsel." Additionally, the district court found that, in attempting to file a first amended complaint, Kaass Law had "failed to correct the glaring pleading and legal errors identified by defendants, thereby recklessly and knowingly multiplying the
proceedings in this action." In addition, they failed to correct the glaring legal errors identified by the defendants, thereby recklessly and knowingly multiplying the proceedings in this action. The district court awarded Wells Fargo a total of $8,480.00 in attorneys' fees.

On appeal, Kaass Law argued that, because it "is not an attorney, nor is it a person admitted to conduct cases in courts, the district court erred in imposing sanctions against it pursuant to Section 1927." The statutory language of 28 U.S.C. § 1927 authorizes
sanctions against "[a]ny attorney or other person admitted to conduct cases in any court of the United States or any Territory." The panel noted that whether a law firm may be considered an "attorney or other person admitted to conduct cases" is an issue of first impression in the Ninth Circuit. Upon reviewing the opinions of sister circuits, the panel rejected the reasoning of the Second and Eleventh Circuits that have upheld sanctions against law firms under 28 U.S.C. § 1927. Persuaded by the reasoning of the Seventh and Sixth Circuits, and based on the "plain language of the statute," the panel vacated the district court's order imposing sanctions against Kaass Law.

To read full opinion, please visit:

http://cdn.ca9.uscourts.gov/da...15/08/27/13-56099.pdf

Panel: Andrew J. Kleinfeld, M. Margaret McKeown, and Milan D. Smith, Jr.

Date of Issued Opinion: August 27, 2015

Docket Number: No. 13-56099

Decided: Reversed and Remanded

Case Alert Author: Robert J. Dagmy

Counsel:
Appellant: Vahag Matevosian (argued), Armen Kiramijyan, Kaass Law, Glendale California.

Appellee Kerry W. Franich (argued), Severson & Werson, Irvine, California; Jan T. Chilton.

Author of Opinion: Judge Milan D. Smith, Jr.

Circuit: Ninth

Case Alert Supervisor: Professor Glenn Koppel

    Posted By: Glenn Koppel @ 10/23/2015 05:33 PM     9th Circuit  

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