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Chung v. Lamb.

No. 22-1266. 7/13/2023. D.Colo. Judge Haztz. Agreement for Legal Representation—Real Party in Interest—Sanctionable Conduct—Attorney Fees—Surreply—Law of the Case.

July 13, 2023

Attorney Hammer and Boscoe Chung (Boscoe) signed an agreement for representation (engagement letter). As relevant here, the engagement letter provided that (1) Boscoe assigned to Hammer “the right to pursue all claims against Tim Lamb and his firm,” and (2) Boscoe and Hammer agreed that Hammer’s representation of Boscoe ended when they “reached the agreement.” Hammer sued Lamb, naming Boscoe as the sole plaintiff in a Fair Debt Collection Practices Act (FDCPA) suit against attorney Lamb and his professional corporation. Hammer declared that she was Boscoe’s attorney on the original complaint and thereafter in the case, and she prevented Lamb from discovering the engagement letter terms for more than three years after she filed suit. When Hammer produced the unredacted engagement letter, Lamb moved for summary judgment, arguing that because of the assignment, Hammer was the real party in interest and that by filing suit under Boscoe’s name Hammer violated Fed. R. Civ. P. 17(a), which requires that an action be prosecuted in the name of the real party in interest. The district court granted summary judgment for Lamb. Lamb moved for attorney fees under 28 USC § 1927. The court denied the motion without prejudice pending disposition of Hammer’s appeal of the summary judgment. After the Tenth Circuit dismissed that appeal, Lamb renewed his sanctions motion. The district court granted the motion, ruling that four examples identified in the summary judgment order constituted sanctionable conduct and awarding Lamb attorney fees of $32,884.64. Hammer appealed, and the Tenth Circuit upheld the findings supporting sanctionable conduct but vacated the award because the district court applied the wrong standard in calculating the attorney fees award. On remand, Lamb renewed his motion for attorney fees, and the district court ordered Hammer to pay Lamb $13,392.66. It also struck a surreply opposing the motion that Hammer had filed without leave.

On appeal, Hammer argued that the district court erred in applying § 1927 because it failed to make the findings necessary to support an award under that section. The Tenth Circuit summarily rejected this argument because its prior decision in this matter clearly affirmed the district court’s determination that Hammer’s conduct justified sanctions under § 1927. Accordingly, there was no need for the court to reassess whether counsel’s conduct deserved sanction.

Hammer also contended that the attorney fees award was improper because it did not accurately determine how the work of Lamb’s attorneys was multiplied by her sanctionable conduct and thus was not tailored to compensate only for excess fees incurred as a result of her conduct. Under 28 USC § 1927, monetary sanctions are allowed when an attorney has unreasonably and vexatiously multiplied the proceedings. An award under § 1927 requires a causal connection between counsel’s objectionable conduct and the multiplication of the proceedings, such that the conduct resulted in proceedings that would not have been conducted otherwise. Here, with the exception of $1,142.21 for work responding to Hammer’s motion to strike some of Lamb’s affirmative defenses, the district court awarded only excess fees incurred because of sanctionable conduct and thus did not abuse its discretion in calculating the award.

Hammer also contended that the district court improperly struck her surreply opposing Lamb’s renewed motion for attorney fees, arguing that (1) Lamb’s reply brief in support of the attorney fees motion raised new arguments and (2) Hammer did not know that Lamb’s legal fees had been paid by Lamb’s insurer until disclosures in the reply brief. However, the district court properly concluded that Lamb had made no new arguments in his reply in support of attorney fees and that he had disclosed his insurance coverage for attorney fees long before submitting his reply brief. Further, payment by the insurer is irrelevant to the sanction award. Therefore, the district court properly struck the surreply.

Lastly, Hammer asserted that the district court ignored the law of the case when it awarded Lamb attorney fees even though his insurer paid his attorney fees. She maintained that once the court ruled that Boscoe could not pursue her FDCPA claim because she had assigned Hammer all rights to relief under that statute, it was bound to similarly rule that Lamb could not pursue an attorney fees award when his insurer had assumed the duty to pay, and paid, those fees. The law of the case only applies to the same issues in subsequent stages in the same case. Here, the two issues were (1) whether Boscoe was the real party in interest when she had no right to recover from the FDCPA lawsuit and (2) whether Lamb had incurred attorney fees for purposes of § 1927 when his insurer had paid the attorney. The factual predicates for the two issues and the governing law were different. Accordingly, the law-of-the-case doctrine does not apply.

The decision was affirmed on all but the $1,142.21 portion of the award.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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