- 4D14-3015-Zdzislaw E. Maslanka v. Wells Fargo Home Mortgage and Embrace Home Loans
Federal Rules of Civil Procedure Rule 11 (See Below) allows the court to award attorney fees to the party against whom a litigant files frivolous (unsupported or nonsensical) motions.
34 States have embraced FRCivPro Rule 11 in their own rules of civil procedure, but Florida embraced it in Florida Statute 57.105 (See Below). It requires the attorney propounding the unsupported motion to pay one half of the sanction cost and the attorney's client to pay the other half. That has raised the hackles of a lot of attorneys who claim it chills their willingness to mount an aggressive advocacy on behalf of the client. Obviously, lawmakers see over-aggressiveness as vexatious, and they decided, finally, to punish the lawyer for it.
Mortgage loan creditors have begun to get sick and tired of dealing with mindless litigation by idiotic practitioners like Neil Garfield.
Johnson v. BANK OF NEW YORK MELLON, Dist. Court, WD Washington 2016
I write now to show a case in point (full text of opinion below). Lajuana Locklin Johnson, a TILA rescission mortgagor, provoked the ire of a USDC judge in Washington State by filing a notice of rescission 10 (TEN!) years after consummation of the loan (obviously following Neil Garfield's ridiculous strategy) when the TILA statute of repose window closes after 3 years. She knew she had no case, but filed it anyway in a silly and misguided effort to get a free house. So, the judge spanked her.Oh, and she claimed she relied on the clear meaning of the SCOTUS Jesinoski opinion to do it. She claimed SCOTUS meant one can send notice of rescission after 3 years, but the high court actually meant the borrower with a valid TILA rescission claim may sue after 3 years. Incidentally, the Minnesota USDC ruled in July 2016 that Jesinoski had no TILA rescission case because he and his wife had written an acknowledged receipt of the proper TILA disclosures. Jesinoski claimed he had invested over $800,000 in the case, much of which came from attorney fees.
Well, first Judge James L. Robart ordered Lajuana and her attorney Smith to show cause why he shouldn't sanction them under Rule 11 for bringing an utterly hopeless TILA rescission action she knew would fail. And in that order he berated attorney Jill J. Smith of Natural Resource Law Group, PLLC, for filing the action in spite of having filed and been sanctioned for one or more prior frivolous actions like Lajuana's. Smith idiotically claimed the table-funding meant the loan had never been consummated and so the statute of repose could not have tolled. But she did not explain how Lajuana could rescind a non-consummated loan.
The judge said this about the essential argument Smith (taken directly from Garfield) propounded:
Excerpt from opinion
Then, Judge Robart ordered these sanctions:Ms. Smith indicates that on October 6, 2005, Ms. Johnson "entered into what she thought was a mortgage loan to purchase" property. (OSC Resp. at 1.) At oral argument, Ms. Smith argued that if the loan was never funded then the loan was never consummated.[3] However, Ms. Smith conceded at oral argument that the relevant parties signed the loan paperwork, money was transferred to the sellers of the house, and Ms. Johnson took possession of the property. These facts unarguably give rise to a contract under Washington Law. See Keystone, 94 P.3d at 949; see also Grimes, 340 F.3d at 1009-10. Ms. Smith nonetheless argued that the loan was unconsummated at that juncture based on the manner in which it was funded and the subsequent history of the loan.Ms. Smith's protestations in her response and at oral argument that the loan was table-funded[4] (id. at 4-5) and her account of the history of the loan subsequent to its consummation (OSC at 2-4) are both irrelevant to her allegation that "the loan was never consummated" (Compl. ¶ 13). Despite being afforded numerous opportunities to do so, Ms. Smith has failed to provide any legal authority—or even a cogent argument— supporting the proposition that the type of funding or subsequent transfers of a loan impact whether the loan was consummated.[5] (See, e.g., OSC Resp. at 5 ("One of the questions at issue is that if a party is merely an originator and NOT a lender or creditor, is there some theory where a loan contract could be considered consummated? If Plaintiff's loan was a table-funded loan, the answer must be `no.'").) Nor has Ms. Smith pointed to any further evidence providing "information and belief" that "the subject loan was never consummated." (Compl. ¶ 13.)The foregoing analysis leads the court to conclude that Ms. Smith's factual allegation that "the loan was never consummated" and the legal theories underpinning that allegation violate Rules 11(b)(2) and 11(b)(3).[6] See Fed. R. Civ. P. 11(b)(2) (requiring that "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"); Fed. R. Civ. P. 11(b)(3) (requiring that "factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery"). The court analyzes the appropriate sanctions below.
(1) No more than 30 days after the date of this order, Ms. Smith and the Natural Resource Law Group must jointly pay sanctions of $10,000.00 to the court;(2) No more than 30 days after the date of this order, Ms. Smith and the Natural Resource Law Group must fully reimburse Ms. Johnson for any attorneys' fees or costs paid by Ms. Johnson in conjunction with this case and file certification with the court that they have done so; and(3) The court dismisses the complaint with prejudice.
I would raise yet another point about this case. The above excerpt provided that "Ms. Smith indicates that on October 6, 2005, Ms. Johnson "entered into what she thought was a mortgage loan to purchase" property... Ms. Smith conceded at oral argument that the relevant parties signed the loan paperwork, money was transferred to the sellers of the house, and Ms. Johnson took possession of the property."
I fail to see how TILA rescission can apply at all to a purchase money loan.
12 CFR Part 1026.23(f) "Exempt transactions. The right to rescind does not apply to the following: 1. A residential mortgage transaction." ("Residential mortgage transaction means a transaction in which a mortgage, deed of trust, purchase money security interestarising under an installment sales contract, or equivalent consensual security interestis created or retained in the consumer's principal dwelling to finance the acquisition or initial construction of that dwelling.")See the whole opinion below.
And let this be a lesson to Neil Garfield Klingons (those who cling to his every utterance:
Heed Neil Garfield at your peril!
FRCivPro Rule 11. Signing Pleadings, Motions, and Other Papers; Representations to the Court; Sanctions
(a) Signature. Every
pleading, written motion, and other paper must be signed by at least
one attorney of record in the attorney's name—or by a party personally
if the party is unrepresented. The paper must state the signer's
address, e-mail address, and telephone number. Unless a rule or statute
specifically states otherwise, a pleading need not be verified or
accompanied by an affidavit. The court must strike an unsigned paper
unless the omission is promptly corrected after being called to the
attorney's or party's attention.
(b) Representations to the Court. 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 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.
(1) In General. If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has
been violated, the court may impose an appropriate sanction on any
attorney, law firm, or party that violated the rule or is responsible
for the violation. Absent exceptional circumstances, a law firm must be
held jointly responsible for a violation committed by its partner,
associate, or employee.
(2) Motion for Sanctions. A
motion for sanctions must be made separately from any other motion and
must describe the specific conduct that allegedly violates Rule 11(b). The motion must be served under Rule 5,
but it must not be filed or be presented to the court if the challenged
paper, claim, defense, contention, or denial is withdrawn or
appropriately corrected within 21 days after service or within another
time the court sets. If warranted, the court may award to the prevailing
party the reasonable expenses, including attorney's fees, incurred for
the motion.
(3) On the Court's Initiative. On
its own, the court may order an attorney, law firm, or party to show
cause why conduct specifically described in the order has not violated Rule 11(b).
(4) Nature of a Sanction. A
sanction imposed under this rule must be limited to what suffices to
deter repetition of the conduct or comparable conduct by others
similarly situated. The sanction may include nonmonetary directives; an
order to pay a penalty into court; or, if imposed on motion and
warranted for effective deterrence, an order directing payment to the
movant of part or all of the reasonable attorney's fees and other
expenses directly resulting from the violation.
(5) Limitations on Monetary Sanctions. The court must not impose a monetary sanction:
(A) against a represented party for violating Rule 11(b)(2); or
(B) on its own, unless it issued the show-cause order under Rule 11(c)(3)before
voluntary dismissal or settlement of the claims made by or against the
party that is, or whose attorneys are, to be sanctioned.
(6) Requirements for an Order. An order imposing a sanction must describe the sanctioned conduct and explain the basis for the sanction.
|
| Florida Statute 57.105 Attorney’s fee; sanctions for raising unsupported claims or defenses; exceptions; service of motions; damages for delay of litigation.—
(1) Upon the court’s initiative or
motion of any party, the court shall award a reasonable
attorney’s fee, including prejudgment interest, to be paid to
the prevailing party in equal amounts by the losing party and
the losing party’s attorney on any claim or defense at any
time during a civil proceeding or action in which the court
finds that the losing party or the losing party’s attorney
knew or should have known that a claim or defense when
initially presented to the court or at any time before trial:
(a) Was not supported by
the material facts necessary to establish the claim or
defense; or
(b) Would not be
supported by the application of then-existing law to those
material facts.
(2) At any time in any civil
proceeding or action in which the moving party proves by a
preponderance of the evidence that any action taken by the
opposing party, including, but not limited to, the filing of
any pleading or part thereof, the assertion of or response to
any discovery demand, the assertion of any claim or defense,
or the response to any request by any other party, was taken
primarily for the purpose of unreasonable delay, the court
shall award damages to the moving party for its reasonable
expenses incurred in obtaining the order, which may include
attorney’s fees, and other loss resulting from the improper
delay.
(3) Notwithstanding subsections (1)
and (2), monetary sanctions may not be awarded:
(a) Under paragraph
(1)(b) if the court determines that the claim or defense was
initially presented to the court as a good faith argument
for the extension, modification, or reversal of existing law
or the establishment of new law, as it applied to the
material facts, with a reasonable expectation of success.
(b) Under paragraph
(1)(a) or paragraph (1)(b) against the losing party’s
attorney if he or she has acted in good faith, based on the
representations of his or her client as to the existence of
those material facts.
(c) Under paragraph
(1)(b) against a represented party.
(d) On the court’s
initiative under subsections (1) and (2) unless sanctions
are awarded before a voluntary dismissal or settlement of
the claims made by or against the party that is, or whose
attorneys are, to be sanctioned.
(4) A motion by a party seeking
sanctions under this section must be served but may not be
filed with or presented to the court unless, within 21 days
after service of the motion, the challenged paper, claim,
defense, contention, allegation, or denial is not withdrawn or
appropriately corrected.
(5) In administrative proceedings
under chapter 120, an administrative law judge shall award a
reasonable attorney’s fee and damages to be paid to the
prevailing party in equal amounts by the losing party and a
losing party’s attorney or qualified representative in the
same manner and upon the same basis as provided in subsections
(1)-(4). Such award shall be a final order subject to judicial
review pursuant to s. 120.68. If the losing party is an agency
as defined in s. 120.52(1), the award to the prevailing party
shall be against and paid by the agency. A voluntary dismissal
by a nonprevailing party does not divest the administrative
law judge of jurisdiction to make the award described in this
subsection.
(6) The provisions of this section
are supplemental to other sanctions or remedies available
under law or under court rules.
(7) If a contract contains a
provision allowing attorney’s fees to a party when he or she
is required to take any action to enforce the contract, the
court may also allow reasonable attorney’s fees to the other
party when that party prevails in any action, whether as
plaintiff or defendant, with respect to the contract. This
subsection applies to any contract entered into on or after
October 1, 1988.
History.—s. 1, ch. 78-275; s. 61, ch. 86-160;
ss. 1, 2, ch. 88-160; s. 1, ch. 90-300; s. 316, ch. 95-147; s.
4, ch. 99-225; s. 1, ch. 2002-77; s. 9, ch. 2003-94; s. 1, ch.
2010-129.
57.115 Execution on judgments; attorney’s fees and costs.—
(1) The court may award against a
judgment debtor reasonable costs and attorney’s fees incurred
thereafter by a judgment creditor in connection with execution
on a judgment.
(2) In determining the amount of
costs, including attorney’s fees, if any, to be awarded under
this section, the court shall consider:
(a) Whether the judgment
debtor had attempted to avoid or evade the payment of the
judgment; and
(b) Other factors as may
be appropriate in determining the value of the services
provided or the necessity for incurring costs in connection
with the execution.
History.—s. 13, ch. 87-145.
|
LAJUANA LOCKLIN JOHNSON, Plaintiff,
|
