Commercial Litigation and Arbitration

FRAP 38 Sanctions Don’t Require Bad Faith But 6th Cir. Only Imposes If Improper Purpose — §1927 Sanctions Don’t Require Bad Faith in 6th Cir., But Still > Negligence: Intentional Abuse of Judicial Process/Knowing Disregard of Multiplicitousness

Raub v. Moon Lake Prop Owners’ Ass’n, 2017 U.S. App. LEXIS 22933 (6th Cir. Nov. 15, 2017):

Plaintiffs David and William Raub appeal the dismissal of their action asserting various civil rights and disability discrimination claims arising from their ownership of lots and membership in a property owners' association. Defendants Tim Whiting and the County of Oscoda ("Defendants") move to be dismissed as parties to the appeal because the claims against them were resolved by a 2016 judgment. They separately move for damages [*2]  and costs against Plaintiffs and their counsel under Federal Rule of Appellate Procedure 38 and 28 U.S.C. § 1927. Plaintiffs and their counsel, Tonie M. Franzese ("Franzese"), have not responded to either motion.

The Raubs, represented by Franzese, filed a complaint against Defendants and seven others alleging various claims arising from Plaintiffs' treatment as property owners and as members of a property owners' association. Plaintiffs accepted Defendants' $5,000 offer of judgment under Federal Rule of Civil Procedure 68 and, on October 21, 2016, the district court entered judgment against Defendants.

Although Defendants attempted to pay the judgment, Franzese refused to provide them with the information needed to comply with federal reporting requirements. As a result, Defendants moved the district court to allow payment of the judgment to Plaintiffs and to require Franzese to provide them with the information necessary to pay the judgment. In response, Plaintiff David Raub disclaimed his interest in the judgment. The district court rejected the disclaimer, granted Defendants' motion to allow payment of judgment, and directed Plaintiffs to provide Defendants' counsel with completed W-9 forms by December 9, 2016.

While Defendant's motion was pending, Plaintiffs amended [*3]  their complaint and added a separate claim that had already been alleged, but not separately pled in their original complaint. After Franzese refused to sign a stipulated order of dismissal of the claims against Defendants, Defendants moved to dismiss the amended complaint under the doctrine of res judicata, citing the 2016 judgment that resolved

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