Filed: Nov. 20, 2012
Latest Update: Mar. 26, 2017
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1829 DARRYL MCKENZIE; MORRIS LAWN AND LANDSCAPE; BENNY W. HYDRICK; DONALD SUELL; RG, through his Guardian ad Litem Wilber Calhoun Jr; Guardian ad Litem Wilber Calhoun, Jr; JC, through his Guardian ad Litem Wilber Calhoun Jr; Guardian ad Litem Wilber Calhoun, Jr; GREGORY HALL; BEVERLY JEAN ALLEN; JOHN ELLA COLEMAN; VALLEY FAIR BAPTIST CHURCH; K&B PROPERTIES; JS, through his Guardian ad Litem Wilber Calhoun Jr; Guardian ad Li
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1829 DARRYL MCKENZIE; MORRIS LAWN AND LANDSCAPE; BENNY W. HYDRICK; DONALD SUELL; RG, through his Guardian ad Litem Wilber Calhoun Jr; Guardian ad Litem Wilber Calhoun, Jr; JC, through his Guardian ad Litem Wilber Calhoun Jr; Guardian ad Litem Wilber Calhoun, Jr; GREGORY HALL; BEVERLY JEAN ALLEN; JOHN ELLA COLEMAN; VALLEY FAIR BAPTIST CHURCH; K&B PROPERTIES; JS, through his Guardian ad Litem Wilber Calhoun Jr; Guardian ad Lit..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1829
DARRYL MCKENZIE; MORRIS LAWN AND LANDSCAPE; BENNY W.
HYDRICK; DONALD SUELL; RG, through his Guardian ad Litem
Wilber Calhoun Jr; Guardian ad Litem Wilber Calhoun, Jr; JC,
through his Guardian ad Litem Wilber Calhoun Jr; Guardian ad
Litem Wilber Calhoun, Jr; GREGORY HALL; BEVERLY JEAN ALLEN;
JOHN ELLA COLEMAN; VALLEY FAIR BAPTIST CHURCH; K&B
PROPERTIES; JS, through his Guardian ad Litem Wilber Calhoun
Jr; Guardian ad Litem Wilber Calhoun, Jr; TORINA LORENZO
COLEMAN,
Plaintiffs – Appellants,
WILLIAM HALL; ROOSEVELT WALKER; DW1, through her Guardian ad
Litem Darlene Champagne; Guardian ad Litem Darlene
Champagne; DW2, through her Guardian ad Litem Della Mae
Jones; Guardian ad Litem Della Mae Jones,
Movants – Appellants,
and
TIMOTHY ARD; BETHLEHEM BAPTIST CHURCH OF GRANITEVILLE,
INCORPORATED; TINA BEVINGTON, individually and on behalf of
others similarly situated; JESSICA CURTIS; JAMES SPLAWN;
ELIZABETH R. CUTRIGHT, individually and on behalf of others
similarly situated; MIKE WILLIAMS CONSTRUCTION LLC;
CHRISTINE GREEN,
Plaintiffs,
CHRISTY T. DALTON,
Petitioner,
ROBERT M. BELL; ERWIN J. LEIZERMAN; MICHAEL J. LEIZERMAN;
PATRICK J. PEROTTI; STEPHEN K. SURASKY,
Movants,
v.
NORFOLK SOUTHERN RAILWAY COMPANY,
Defendant – Appellee,
and
NORFOLK SOUTHERN CORPORATION; JOHN DOES 1-10,
Defendants.
No. 11-1365
DARRYL MCKENZIE; MORRIS LAWN AND LANDSCAPE; TIMOTHY ARD;
BENNY W. HYDRICK; DONALD SUELL; BETHLEHEM BAPTIST CHURCH OF
GRANITEVILLE, INCORPORATED; RG, through his Guardian ad
Litem Wilber Calhoun Jr; Guardian ad Litem Wilber Calhoun,
Jr; JS, through his Guardian ad Litem Wilber Calhoun Jr;
Guardian ad Litem Wilber Calhoun, Jr; JC, through his
Guardian ad Litem Wilber Calhoun Jr; Guardian ad Litem
Wilber Calhoun, Jr; GREGORY HALL; TINA BEVINGTON,
individually and on behalf of others similarly situated;
JOHN ELLA COLEMAN; BEVERLY JEAN ALLEN; VALLEY FAIR BAPTIST
CHURCH; K&B PROPERTIES; JESSICA CURTIS; ELIZABETH R.
CUTRIGHT, individually and on behalf of others similarly
situated; JAMES SPLAWN; MIKE WILLIAMS CONSTRUCTION LLC;
TORINA LORENZO COLEMAN,
Plaintiffs – Appellants,
WILLIAM HALL; DW1, through her Guardian ad Litem Darlene
Champagne; Guardian ad Litem Darlene Champagne; ROOSEVELT
WALKER; DW2, through her Guardian ad Litem Della Mae Jones;
Guardian ad Litem Della Mae Jones,
Movants – Appellants,
and
CHRISTINE GREEN,
Plaintiff,
2
CHRISTY T. DALTON,
Petitioner,
ROBERT M. BELL; ERWIN J. LEIZERMAN; MICHAEL J. LEIZERMAN;
PATRICK J. PEROTTI; STEPHEN K. SURASKY,
Movants,
v.
NORFOLK SOUTHERN RAILWAY COMPANY,
Defendant – Appellee,
and
NORFOLK SOUTHERN CORPORATION; JOHN DOES 1-10,
Defendants.
Appeals from the United States District Court for the District
of South Carolina, at Aiken. Margaret B. Seymour, District
Judge. (1:05-cv-00115-MBS)
Argued: September 19, 2012 Decided: November 20, 2012
Before GREGORY, SHEDD, and AGEE, Circuit Judges.
Affirmed in part, dismissed in part, and reversed in part by
unpublished per curiam opinion.
ARGUED: Paul Allen Dominick, NEXSEN PRUET, Charleston, South
Carolina, for Appellants. Ronald K. Wray, II, GALLIVAN, WHITE &
BOYD, PA, Greenville, South Carolina, for Appellee. ON BRIEF:
Stephen P. Groves, Sr., NEXSEN PRUET, Charleston, South
Carolina; Douglas M. Schmidt, DOUGLAS SCHMIDT LAW FIRM,
Graniteville, South Carolina, for Appellants. Thomas E.
Vanderbloemen, GALLIVAN, WHITE & BOYD, PA, Greenville, South
Carolina, for Appellee.
3
Unpublished opinions are not binding precedent in this circuit.
4
PER CURIAM:
Appellants challenge the district court’s orders enjoining
their state court actions and imposing attorneys’ fees against
their counsel. For the reasons that follow, we dismiss in part
and affirm in part the injunctions, and reverse the imposition
of attorneys’ fees.
I.
The underlying facts arise from a Norfolk Southern Railway
Company (“Norfolk Southern”) train derailment and collision that
occurred in January 2005, in Graniteville, South Carolina. The
collision caused the release of chlorine from a ruptured train
car tank. The release of the chlorine gas led to death and
physical injury to individuals, damage to real and personal
property, economic loss, and evacuation expenses. Multiple
federal court actions ensued, were consolidated, litigated, and
settled in the U.S. District Court of South Carolina. Of import
to this appeal is the Curtis class action that covered harm
suffered by individuals and businesses located in the area close
to the derailment site. See Curtis v. Norfolk S. Ry. Co., No.
1:05-CV-115, 2010 WL 2560679, at *1 (D.S.C. June 21, 2010).
5
Affected class members could opt out of the Curtis
settlement agreement by August 1, 2005. 1 To opt out, class
members had to mail a written request to the Class Notice
Administrator, Epiq Systems (“Epiq”)--a neutral party appointed
by the district court to handle this matter. Upon receipt of an
opt-out form, Epiq stamped the form with a barcode and date-
stamp indicating the receipt date. After the time to opt out
passed, the district court approved the Joint Class Action
Settlement for the Curtis class.
In 2007, Appellants 2 sued Norfolk Southern in South Carolina
state court to recover for injuries they sustained as a result
of the train derailment. The state court actions proceeded
through the normal course of litigation until discovery. While
discovery in state court was ongoing, Norfolk Southern filed in
the District Court of South Carolina several motions for orders
to show cause and to enjoin the pending state court actions.
1
Appellants contend that the opt-out date was extended to
September 15, 2005. However, the record supports the conclusion
that the deadline was August 1, 2005.
2
Appellants are as follows: (1) Darryl McKenzie; (2)
Morris Lawn & Landscape (“Morris Lawn”); (3) Benny W. Hydrick;
(4) Donald Suell; (5) Wilber Calhoun Jr., as guardian ad litem
for RG, JS, and JC; (6) Gregory Hall; (7) Beverly J. Allen;
(8) John E. Coleman; (9) Valley Fair Baptist Church (“Valley
Fair”); (10) K&B Properties; (11) William Hall;
(12) Roosevelt Walker; (13) Darlene Champagne, as guardian ad
litem for DW I; and (14) Della Mae Jones as guardian ad litem
for DW II.
6
Norfolk Southern argued that the Curtis class settlement
agreement foreclosed the state court actions.
Following a hearing at which Appellants’ counsel,
Douglas Schmidt, was absent, the district court informed Norfolk
Southern that it would enjoin the state court actions and grant
Norfolk Southern’s request for attorneys’ fees associated with
the motions. On February 8 and 9, 2010, the district court
entered orders granting Norfolk Southern’s motions for
injunctions. The district court directed Norfolk Southern to
file motions and affidavits supporting and specifying its
attorneys’ fees request.
Subsequently, Schmidt filed separate motions for
reconsideration or new trial on behalf of all Appellants except
Walker and K&B Properties, explaining that he was unable to
attend the hearing due to illness. Additionally, Norfolk
Southern filed several motions for attorneys’ fees, specifying
the actual amounts incurred in litigating each action.
On April 14, 2010, at a hearing on the motions for
reconsideration and the motions for attorneys’ fees, the
district court denied the motions for reconsideration and took
the motions for attorneys’ fees under advisement. On June 21,
2010, the district court issued an order awarding attorneys’
fees to Norfolk Southern. The district court determined that
pursuant to 28 U.S.C. § 1927, the fees should be borne
7
individually by Appellants’ counsel, Schmidt, because the state
court actions were filed and maintained as a result of counsel’s
errors and omissions. On July 20, 2010, Appellants filed
notices of appeal in this Court appealing the February 8 and 9
orders issuing the injunctions, the denial of the motions for
reconsideration, and the June 21 order awarding attorneys’ fees.
On October 26, 2010, pursuant to Federal Rule of Civil
Procedure 60(b), Appellants moved the district court to vacate
or modify the injunctions on the grounds of new evidence.
Specifically, three Appellants--Coleman, Hydrick, and Valley
Fair--moved the district court to vacate the injunctions issued
against their state actions on the basis that Epiq mishandled
and mismanaged their forms. Appellants also moved the court to
vacate or modify the June 21 order on attorneys’ fees on the
basis that Schmidt’s actions were not a result of bad faith.
The district court denied the motion for reconsideration, with
one exception--the court reduced the attorneys’ fees award by
the amount attributable to obtaining the injunction against
Valley Fair because the court determined that Valley Fair’s opt-
out form was timely filed, although it was filed under a
8
different name. On April 19, 2011, Appellants appealed the Rule
60(b) decision. We consolidated the first and second appeals. 3
II.
A.
Appellants first challenge the district court’s injunctions
enjoining their state court actions. We conclude that we have
no jurisdiction over certain untimely filed appeals of the
injunctions, and the remaining appeals are without merit. We
address both points in turn.
3
While these appeals were pending, Appellants filed a
motion in this Court to strike objectionable portions of Norfolk
Southern’s Response Brief. As the Seventh Circuit has noted:
The Federal Rules of Appellate Procedure provide a
means to contest the accuracy of the other side’s
statement of facts: that means is a brief (or reply
brief, if the contested statement appears in the
appellee’s brief), not a motion to strike. Motions to
strike sentences or sections out of briefs waste
everyone’s time. . . . Motions to strike words,
sentences, or sections out of briefs serve no purpose
except to aggravate the opponent--and though that may
have been the goal here, this goal is not one the
judicial system will help any litigant achieve.
Motions to strike disserve the interest of judicial
economy. The aggravation comes at an unacceptable
cost in judicial time.
Redwood v. Dobson, 476 F.3d 462, 471 (7th Cir. 2007). In their
Reply Brief, Appellants had the opportunity to object or rebut
objectionable portions of Norfolk Southern’s Brief but failed to
do so. Hence, we deny the motion to strike.
9
i.
“[T]he timely filing of a notice of appeal in a civil case
is a jurisdictional requirement.” Bowles v. Russell, 551 U.S.
205, 214 (2007). Federal Rule of Appellate Procedure 4(a)(1)(A)
allows parties thirty days to file an appeal after the entry of
the district court’s final judgment or order. When a party
files a Rule 59 motion for new trial or reconsideration, or a
Rule 60 motion within 28 days after judgment, the time to file
an appeal runs from the entry of the district court’s order
disposing of such motion. Fed. R. App. P. 4(a)(4)(A).
With the exception of the injunction appeals filed by
Coleman, Hydrick, and Valley Fair, all the other challenges to
the injunctions are untimely. Specifically, Appellants K&B
Properties and Walker did not move for reconsideration of the
February 8 and 9 district court orders enjoining their state
court actions. Consequently, their appeals filed on July 20,
2010--more than five months after the injunctions issued against
their state court actions--are time-barred. Accordingly, we
dismiss their appeals of the injunctions for lack of
jurisdiction.
Further, the appeals of the injunctions filed by Appellants
McKenzie, Morris Lawn, Suell, Gregory Hall, William Hall,
Calhoun, Allen, Champagne, and Jones are also dismissed for lack
of jurisdiction. Although these Appellants moved for
10
reconsideration, their time to appeal the denial of the request
for reconsideration lapsed thirty days from the district court’s
denial of the motions on April 14, 2010. Thus, their appeals
filed on July 20, 2010, were untimely.
Appellants contend that because the district court took the
attorneys’ fees matter under advisement, the district court’s
decision on the motions for reconsideration was not final. We
disagree. 28 U.S.C § 1291 confers on courts of appeals
jurisdiction over “final” decisions of federal district courts.
A district court’s order is “final” for purposes of 28 U.S.C.
§ 1291 if it “‘ends the litigation on the merits and leaves
nothing for the court to do but execute the judgment.’”
Carolina Power & Light Co. v. Dynegy Mktg. & Trade, 415 F.3d
354, 358 (4th Cir. 2005) (quoting Catlin v. United States,
324
U.S. 229, 233 (1945)). “[A]n unresolved motion to assess
attorneys[’] fees as costs to the prevailing party generally
does not prevent a judgment on the merits from being final
because it does not call into question a decision on the
merits.” Carolina Power & Light Co., 415 F.3d at 358; see Fed.
R. Civ. P. 58(e). If, however, the “substantive law requires
[attorney’s fees] to be proved at trial as an element of
damages,” then “a judgment on liability that does not fix
damages is not a final judgment.” Fed. R. Civ. P. 54(d)(2)(A);
Carolina Power & Light Co., 415 F.3d at 358.
11
Here, Norfolk Southern’s motion for attorneys’ fees is
collateral and does not call into question the district court’s
decision to enjoin the state court actions. The only condition
precedent to recovering attorneys’ fees is Norfolk Southern’s
successful litigation of the injunctions. 4 See Budinich v.
Becton Dickinson & Co., 486 U.S. 196, 198-203 (1988) (holding
that a motion for attorneys’ fees was collateral and did not
prevent the district court’s order from being a final judgment).
Thus, the district court’s denial of the motions to reconsider
the injunctions was appealable before the determination of
attorneys’ fees. Accordingly, these appeals of the injunctions
are untimely and dismissed for lack of jurisdiction.
ii.
The only injunction appeals that survive the jurisdictional
time-bar are those filed by Appellants Coleman, Hydrick, and
Valley Fair because the district court ruled on their subsequent
Rule 60(b) motion on March 29, 2011, and they timely filed their
appeals on April 19, 2011. We review a district court’s
decision to enjoin state court actions for abuse of discretion.
4
The district court’s decision to set aside Norfolk
Southern’s fees attributable to Valley Fair upon its
determination that Valley Fair properly opted out evinces this
point.
12
In re Am. Honda Motor Co., Inc., 315 F.3d 417, 434 (4th Cir.
2003).
We conclude that the district court did not abuse its
discretion in finding that Appellants Hydrick and Coleman failed
to opt out of the Curtis class settlement. The record
demonstrates that Coleman submitted an opt-out form but later
participated in the settlement and received payments. Hydrick
produced a copy of an opt-out form without a barcode and date-
stamp to prove receipt by Epiq, and the affidavit submitted by
Schmidt’s office manager claiming that the opt-out form was
timely submitted fails to indicate who mailed the form or that
the form was sent before the deadline. Thus, the district court
did not abuse its discretion in denying the motion for
reconsideration filed by Hydrick and Coleman.
Regarding Valley Fair, we read the district court’s March
29, 2011 opinion as lifting the injunction against Valley Fair.
Therefore, Valley Fair’s challenge of the injunction is
dismissed as moot. For all these reasons, the appeals of the
injunctions are dismissed in part and affirmed in part.
B.
Appellants next challenge the district court’s entry of
attorneys’ fees against Schmidt under 28 U.S.C. § 1927. Prior
to addressing the merits of the § 1927 sanctions, we must
determine whether we have jurisdiction.
13
i.
Federal Rule of Appellate Procedure 3(c)(1)(A) requires
that a notice of appeal “specify the party or parties taking the
appeal by naming each one in the caption or body of the notice.”
Schmidt is not a named party in the notice of appeal of the
attorneys’ fees. As a result, Norfolk Southern contends that we
lack jurisdiction over the appeal of the attorneys’ fees because
there is a “risk of ambiguity and confusion” as to who the
appellant is and what matter is appealed. See Newport News
Holdings Corp. v. Virtual City Vision, Inc., 650 F.3d 423, 443
(4th Cir. 2011) cert. denied,
132 S. Ct. 575,
181 L. Ed. 2d 425
(2011).
We find that there is no ambiguity or confusion because the
attorneys’ fees were assessed individually against Schmidt, and
only Schmidt was entitled to bring the appeal of this sanction.
As such, we have jurisdiction to address the merits of the
appeal of attorneys’ fees.
ii.
On the merits, Appellants contend the district court erred
in issuing attorneys’ fees against Schmidt under 28 U.S.C.
§ 1927. We review a district court’s decision to impose
sanctions pursuant to § 1927 for abuse of discretion. Miltier
v. Beorn, 896 F.2d 848, 855 (4th Cir. 1990).
14
Pursuant to § 1927, “Any attorney . . . who so multiplies
the proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs,
expenses, and attorneys’ fees reasonably incurred because of
such conduct.” We have repeatedly stated that “[b]ad faith on
the part of the attorney is a precondition to imposing fees
under § 1927.” E.E.O.C. v. Great Steaks, Inc., 667 F.3d 510,
522 (4th Cir. 2012) (citing Chaudhry v. Gallerizzo,
174 F.3d
394, 411 n.14 (4th Cir. 1999); Brubaker v. City of Richmond,
943
F.2d 1363, 1382 n. 25 (4th Cir. 1991).
Relying on Sanford v. Virginia, 689 F. Supp. 2d 802 (E.D.
Va. 2010), Norfolk Southern contends that § 1927 does not
require a finding of bad faith. Sanford discusses our line of
cases which clearly state the proposition that bad faith is a
precondition to sanctions under § 1927. 689 F. Supp. 2d at 806-
808. Sanford asserts, however, that our decisions merely state
this proposition in dicta because a finding of bad faith was not
necessary to reach our conclusions in those cases. Id. We
disagree. In Great Steaks, our most recent decision on this
issue decided after Sanford, we restated the proposition that
bad faith is required for § 1927 sanctions and affirmed the
district court’s denial of the defendant’s motion for attorneys’
fees where the district court expressly found that the plaintiff
15
had not acted in bad faith. 667 F.3d at 522-23. 5 Accordingly,
this Circuit requires a finding of bad faith prior to the
imposition of sanctions pursuant to § 1927.
Here, in awarding attorneys’ fees, the district court
stated:
having observed Plaintiff’s counsel and judged his
credibility, and having listened to his arguments in
justification for his actions, finds that Plaintiffs’
counsel’s errors and omissions are the result of
inefficiency and lack of competence in dealing with an
5
We recognize that our sister circuits have come to
differing conclusions on whether bad faith is a precondition to
imposing sanction under § 1927. The First, Fifth, Sixth,
Seventh, Eight, Tenth, and Eleventh Circuits have found bad
faith is not a predicate to imposing § 1927 sanctions. See
Rentz v. Dynasty Apparel Indus., Inc., 556 F.3d 389, 396 (6th
Cir. 2009); Hamilton v. Boise Cascade Exp.,
519 F.3d 1197, 1202
(10th Cir. 2008); Amlong & Amlong, P.A. v. Denny’s, Inc.,
500
F.3d 1230, 1241 (11th Cir. 2007); Clark v. United Parcel Serv.,
Inc.,
460 F.3d 1004, 1011 (8th Cir. 2006); Claiborne v. Wisdom,
414 F.3d 715, 721 (7th Cir. 2005); Edwards v. Gen. Motors Corp.,
153 F.3d 242, 246 (5th Cir. 1998); Cruz v. Savage,
896 F.2d 626,
631–32 (1st Cir. 1990). The Second and Third Circuits have held
that bad faith is necessary to impose sanctions under § 1927.
See Oliveri v. Thompson,
803 F.2d 1265, 1273 (2d Cir. 1986);
Baker Indus., Inc. v. Cerberus Ltd.,
764 F.2d 204, 209 (3d Cir.
1985). The Ninth Circuit’s case law is unclear on this issue,
see In re Girardi,
611 F.3d 1027, 1061 (9th Cir. 2010), and the
D.C. Circuit has not decided this issue, see LaPrade v. Kidder
Peabody & Co., Inc.,
146 F.3d 899, 905 (D.C. Cir. 1998).
Recognizing this split in authorities, we are nonetheless
bound by our precedent which explicitly states bad faith is a
precondition to imposing sanctions under § 1927. United States
v. Chong, 285 F.3d 343, 346 (4th Cir. 2002) (“It is well settled
that a panel of this [C]ourt cannot overrule, explicitly or
implicitly, the precedent set by a prior panel of this [C]ourt.
Only the Supreme Court or this [C]ourt sitting en banc can do
that.”) (citation and quotation marks omitted)).
16
excessive number of clients, and not the result of bad
faith or willful misconduct.
Curtis v. Norfolk S. Ry. Co., No. 1:05-CV-115, 2010 WL 2662269,
at *3 (D.S.C. June 21, 2010) (emphasis added). In denying
Appellants’ Rule 60(b) motion for relief from attorneys’ fees,
the district court stated:
Certainly[,] the court was loath to reach a conclusion
that [Schmidt] intentionally and with improper motive
disregarded evidence of res judicata presented by
Defendant with respect to the state court proceedings
at issue. It is the court’s expectation that all
counsel appearing before the court will comport
themselves in accordance with the rules of
professional conduct, and the court was willing to
give [Schmidt] the benefit of the doubt by not making
a finding of bad faith. Nevertheless, sanctions are
appropriate. Counsel engaged in reckless behavior
that demonstrated a conscious disregard for a
foreseeable risk that proceedings would be
unreasonably and vexatiously multiplied.
(J.A. 1968-69 (emphasis added).) We note that at the time of
its decision, the district court did not have the benefit of
Great Steaks. Yet, our precedent on the necessity of a bad
faith finding prior to the imposition of § 1927 sanctions is
clear. Because the district court expressly and specifically
refrained from finding bad faith, it was error to impose
attorneys’ fees on Schmidt. Accordingly, the district court’s
order imposing attorneys’ fees is reversed.
17
III.
For the reasons stated above, we dismiss in part, and
affirm in part, the appeals of the injunctions. Additionally,
we reverse the award of attorneys’ fees issued against Schmidt.
AFFIRMED IN PART,
DISMISSED IN PART,
AND REVERSED IN PART
18
