Commercial Litigation and Arbitration

Vexatious Litigant: 3 Suits for Same Grievance, Alone, Enough — Finding Claims Colorable for In Forma Pauperis Status Doesn’t Bar Later Sanctions — Appeals: Denial of Rule 59 Motion Unappealable, Court Treats Notice as Appeal of Underlying Order

Mitchell v. Taylor, 2018 U.S. App. LEXIS 9651 (6th Cir. Apr. 16, 2018) (unpublished):

Dwight Mitchell, a pro se litigant, appeals the district court's order granting in part and denying in part the motion of Guardian Home Care Holdings, Inc. ("Guardian Home Care") for an award of attorney's fees and sanctions. This case has been referred to a panel of the court that, upon examination, unanimously agrees that oral argument is not needed. See Fed. R. App. P. 34(a).

In 2007, Mitchell owned and operated Sun Valley Home for the Aged ("Sun Valley"), a licensed residential home for [*2]  the elderly in Hartsville, Tennessee. On August 15, 2007, the Tennessee Board for Licensing Health Care Facilities suspended Mitchell's license to maintain Sun Valley. In 2015, Mitchell filed a complaint and a first amended complaint, on behalf of himself and Sun Valley, against Wilson Taylor, Guardian Home Care, Mary Holder, the City of Hartsville, Tommy Thompson, Jr., and the Trousdale County Sheriff's Department. Mitchell alleged that, in the course of their involvement in the 2007 closure of Sun Valley, the defendants violated his rights under the Fourth and Fourteenth Amendments. Mitchell also asserted a state-law claim against Taylor for fraudulent concealment.

The district court dismissed Mitchell's claims on behalf of Sun Valley without prejudice for lack of standing. The defendants thereafter filed motions to dismiss Mitchell's complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. The magistrate judge entered a report recommending that the defendants' motions to dismiss be granted. Mitchell filed objections to the report and recommendation and moved for leave to file a second amended complaint. The district court adopted the report and recommendation after conducting a de novo [*3]  review thereof, dismissed Mitchell's federal claims with prejudice, dismissed his state-law claim without prejudice, and denied as futile his motion for leave to amend. Mitchell's appeal from the district court's judgment dismissing his action is currently pending in Case No. 16-6335.

Guardian Home Care later filed a motion for attorney's fees and sanctions. The district court granted the motion insofar as it requested that Mitchell be deemed a vexatious litigant in relation to the 2007 closure of Sun Valley but denied the motion insofar as it requested attorney's fees or other sanctions. As to the sanction imposed, the district court explained that the present action is Mitchell's third lawsuit against Guardian Home Care arising from the 2007 closure of Sun Valley and "[i]t is unfair to require Guardian Home Care to spend the time, money and effort to defend stale claims." Accordingly, the district court enjoined Mitchell from filing further suits against Guardian Home Care relating to the 2007 closure of Sun Valley without obtaining leave of the district court. Mitchell filed a motion under Federal Rule of Civil Procedure 59(e) to alter or amend the district court's order, which the district court denied. Mitchell then [*4]  filed a notice of appeal from the district court's order denying Rule 59(e) relief.

In this appeal, Mitchell argues that the district court erred in imposing sanctions.

Ordinarily, denials of Rule 59 motions are not appealable as such, and appellate courts should treat a notice of appeal that cites only an order disposing of a Rule 59 motion as an appeal of the underlying [order]." A Renewed Mind v. Weatherby, 675 F. App'x 572, 574 (6th Cir. 2017) (quoting Crown Serv. Plaza Partners v. City of Rochester Hills, Nos. 98-1581/98-1666, 2000 U.S. App. LEXIS 9935, 2000 WL 658029, at *4 (6th Cir. May 8, 2000)). We review for abuse of discretion the district court's order deeming Mitchell a vexatious litigant subject to pre-filing restrictions. See First Bank of Marietta v. Hartford Underwriters Ins., 307 F.3d 501, 516 (6th Cir. 2002); Feathers v. Chevron U.S.A., Inc., 141 F.3d 264, 269 (6th Cir. 1998). A district court has "inherent authority" to impose sanctions based on a litigant's bad faith, contemptuous conduct, and conduct that "abuses the judicial process." First Bank of Marietta, 307 F.3d at 516 (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 44-45, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991)). An available sanction is "outright dismissal of a lawsuit." Chambers, 501 U.S. at 45. A district court also has inherent authority to issue an injunctive order to prevent prolific litigants from filing harassing and vexatious pleadings. See Feathers, 141 F.3d at 269; Filipas v. Lemons, 835 F.2d 1145, 1146 (6th Cir. 1987).

As the district court explained, the present action is Mitchell's third lawsuit against Guardian Home Care arising from the 2007 closure of Sun Valley. Mitchell was warned, in his prior federal lawsuit against Guardian Home [*5]  Care, "that any further attempts to relitigate these same issues may result in sanctions." Under these circumstances, the district court was within its discretion to deem Mitchell a vexatious litigant. See Feathers, 141 F.3d at 269; Filipas, 835 F.2d at 1146.

Mitchell's arguments to the contrary are unavailing. He first contends that Guardian Home Care failed to properly request sanctions under Federal Rule of Civil Procedure 11. But the Federal Rules of Civil Procedure do not displace a district court's inherent authority to impose sanctions. See Chambers, 501 U.S. at 42-43. Mitchell also argues that the district court's sanctions order was inconsistent with its order granting him leave to proceed in forma pauperis below. But the order granting Mitchell pauper status in the district court found that he stated colorable claims "for purpose of initial the review only." That preliminary determination did not foreclose the district court's later conclusion as to sanctions. Finally, Mitchell attempts to distinguish the facts of his case from those at issue in Feathers. But he does not dispute that the present action is his third lawsuit against Guardian Home Care arising from the 2007 closure of Sun Valley. That fact alone provides sufficient support for the district court's decision. See Feathers, 141 F.3d at 269.

Because [*6]  the district court did not abuse its discretion in imposing sanctions, we AFFIRM the district court's order.

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