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§ 1927 Sanctions — Continuing to Litigate Claims after Adverse Party Offers to Provide the Only Relief to Which Claimant Is Entitled Merits Sanction

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Milner v. Biggs, 2014 U.S. App. LEXIS 9075 (6th Cir. May 13, 2014):

In the underlying case, plaintiffs-appellants Jason A. Milner, Natasha M. Milner, and Lexi Milner retained Jason Shugart as counsel after discovering mold in a home approximately four weeks after they purchased it. On behalf of the Milners, Shugart  [*2] filed a lawsuit in Pike County Court of Common Pleas in Ohio, raising a multiplicity of claims against nine named and additional unnamed defendants, including the seller, the home inspector, the seller's real-estate agency, the Milners' real-estate agents, and the title company. The case was subsequently removed to the United States District Court for the Southern District of Ohio on October 7, 2010. The district court first dismissed several claims in response to two motions for judgment on the pleadings, and ultimately granted summary judgment to all defendants on the remaining claims. We affirmed the district court's judgment with respect to all counts. Milner v. Biggs, 522 F. App'x 287 (6th Cir. 2013).

The award of sanctions on appeal here involves Shugart's persistence in litigation against the following defendants-appellees: Arrow Title Agency, LLC, which was the title company used during the underlying home purchase; its president, Jonathan Holfinger; and its regional sales manager, Chris Moore (collectively "Arrow"). The Milners' complaint alleged six causes of action against Arrow: violation of the Ohio Consumer Sales Practices Act ("OCSPA"), violation of the federal Real Estate  [*3] Settlement Procedures Acts ("RESPA"), negligence, negligent misrepresentation, conspiracy, and unjust enrichment. R. 3 (Compl.) (Page ID # 107-23). The primary factual basis for the claims against Arrow was that it had prepared a deed incorrectly conveying title only to the husband in the sale rather than to both buyers.  Id. at ¶ 77 (Page ID #115).

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The district court acted within its discretion to sanction Shugart for continuing to litigate his meritless claims after Arrow offered to  [*12] provide the only relief to which his clients were entitled. Sanctions are not appropriate in this case merely because Shugart pursued a claim which was ultimately unsuccessful. If an attorney reasonably believes that a claim has merit, he is not subject to sanctions because the court issues a judgment in favor of the opposing party. See Michigan Division-Monument Builders of N. Am. v. Michigan Cemetery Ass'n, 524 F.3d 726, 739 (6th Cir. 2008). However, Shugart's continued litigation of the claims after Arrow offered to correct the deed, including multiplicative motions practice and inappropriate discovery requests, was vexatious and warranted sanctions.

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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