Opinion
CIVIL NO. 1:02CV212
July 30, 2003
MEMORANDUM OF OPINION AND ORDER OF SANCTIONS
THIS MATTER came before the Court on June 30, 2003, for a hearing on the issue of sanctions to be imposed against the Plaintiff Betty R. Byrd, her attorney, William Isaac Diggs (Diggs), and/or the law firm of Diggs, Danielson, L.L.C. Having considered the arguments of counsel and the subsequent submissions, the Court enters the following order of sanctions.
I. SCOPE OF SANCTIONS
It is first noted that, in addition to the Defendants' motions for sanctions, the Court also gave notice to Byrd and her attorneys of specific conduct which it considered to be potentially sanctionable. See Order to Show Cause, filed May 23, 2003, at 2-4. In addition, Diggs was notified that the Court was considering applying the provisions of 28 U.S.C. § 1927 to him personally. Id., at 4. The Defendants have also requested sanctions pursuant to (1) the Court's inherent authority; (2) Fed.R.Civ.P. 11; (3) 28 U.S.C. § 1927; (4) 42 U.S.C. § 1988; and (5) an award of costs in addition to sanctions. At the conclusion of the hearing, the attorneys and parties were provided an additional opportunity to make filings in response to the oral arguments and in support of their various positions.
II. SANCTIONABLE CONDUCT PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 11(C)(1)(B)
The Court's Order to Show Cause listed specific instances of conduct to which response was required. Those instances, and the responses thereto, will be addressed sequentially.
(1) Allegations in the course of this litigation through responses to discovery and deposition testimony that videotapes and photographs existed showing Defendant Cynthia Hopson engaged in sexual conduct with Plaintiff's husband despite the ruling of a state court judge that, as a matter of law, Plaintiff had admitted no such evidence existed and she had made such allegations in order "to worry" the Defendant Cynthia Hopson.
The provisions of Rule 11 do not apply to disclosures and discovery requests, responses, objections, and motions that are subject to the provisions of Rules 26 through 37. Fed.R.Civ.P. 11(d). The Court's review of the record discloses that, with the exception of Diggs' response to the Order to Show Cause, the allegations relating to these pictures and videotapes occurred during depositions and in response to Defendants' motion for a protective order pursuant to Rule 26. As a result, sanctions for this conduct will not be imposed pursuant to Rule 11. However, as stated below, this conduct will be sanctioned on other grounds.
(2) Initiating and continuing this action after the previous court had ruled against Byrd.
Diggs responded to this ground by arguing that the claims brought in this action could not have been litigated in the state court alienation of affections case and, therefore, are not subject to issue preclusion. However, the Court's purpose in notifying Diggs of this ground for potential Rule 11 sanctions had nothing to do with issue preclusion or res judicata. Rather, the question is whether, by filing this action and continuing its prosecution, Diggs and Byrd (1) presented signed documents to the Court for any improper purpose, such as to harass; (2) presented claims alleged in the complaint which were not warranted by existing law or by a nonfrivolous argument for the extension thereof; and/or (3) presented claims for which there was no evidentiary support both in the complaint and subsequently filed documents. The latter two points will be discussed below; however, the Court finds that the initiation and continuation of this lawsuit were done with the specific intention to harass and pursue a personal vendetta.
The Court construes Diggs' response as having been made both on his and Byrd's behalf.
Rule 11(b)(2) cannot be used to monetarily sanction a party who is represented by counsel. Fed.R.Civ.P. 11(c)(2)(A); Baffa v. Donaldson, Lufkin Jenrette Sec., 222 F.3d 52, 57 (2nd Cir. 2000).
Diggs argues that the conspiracy against Byrd continued well after the state court action was dismissed and the allegations of this complaint were intended to include those subsequent facts.
Based on information provided by Plaintiff and her witnesses, the undersigned filed a case alleging that the defendants engaged in a conspiracy which included acts committed by them in furtherance of the conspiracy which arose or expanded after November 8, 2001 [the date the state court action was dismissed]. While some of the acts committed prior to November 8, 2001 were predicate acts for a civil RICO claim (the attempted murder of May 1, 2000, for example), . . . the conspiracy and pattern of racketeering activity continued up until this action was filed.William Isaac Diggs' Return to Order to Show Cause, filed June 30, 2003, at 7.
Diggs filed this lengthy document less than two hours prior to the hearing. Despite the fact that it was provided to the Court prior to the hearing, Diggs did not serve copies of the pleading on opposing counsel until after each of them had addressed the Court. This conduct was obviously a strategy designed to limit their ability to refute the document and was inappropriate.
In the Memorandum and Opinion, filed May 23, 2003, the undersigned noted that "[d]uring the pendency of the state court action, Byrd did not amend her complaint to add allegations made in this action." Memorandum of Opinion, filed May 23, 2003, at 19. Diggs responds that Byrd told her previous attorney about the incidents and he failed to amend that complaint. Diggs' Return to Order to Show Cause, at 11-12.
The claims based on facts occurring after the initial state court filing do not support federal claims which could have been filed in good faith. Thus, it is not surprising that Byrd's previous attorney refused to add such claims and allegations by amendment or to bring a federal lawsuit. "Filing a complaint in federal court is no trifling undertaking." Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002). "One of the fundamental purposes of Rule 11 is to `reduce frivolous claims, defenses or motions and to deter costly meritless maneuvers, . . . [thereby] avoid[ing] delay and unnecessary expense in litigation.'" Id. (quoting Golden Eagle Distrib. Corp. v. Burroughs Corp., 801 F.2d 1531, 1536 (9th Cir. 1986)). "In this case, there is no question that [Byrd and Diggs] filed the instant suit with the specific intent of circumventing [the state] Court's dismissal of [their] earlier suit." John Akridge Co. v. Travelers Companies, 944 F. Supp. 33, 34 (D.D.C. 1996), aff'd, 1997 WL 411654 (D.C. Cir. 1997). Indeed, the procedural history of this case discloses a motive to harass. See, e.g., Markwell v. County of Bexar, 878 F.2d 899, 903 (5th Cir. 1989).
North Carolina Superior Court Judge Michael E. Helms dismissed the state court action for criminal conversation and alienation of affections, Byrd v. Hopson, 570 S.E.2d 499 (2002), on November 8, 2001. In his decision, Judge Helms noted that Plaintiff had not only accused Cynthia Hopson (Cynthia) of having an affair with her husband, but had retained a private investigator who installed surveillance devices in Cynthia's home without her knowledge. Exhibit A, Order of Judge Michael Helms, entered November 6, 2001, attached to Affidavit of Michele Duncan, attached to Cynthia Hopson's Motion for Summary Judgment, filed April 4, 2003, at 49. Plaintiff then advised Cynthia that the investigator had taken video tapes and photographs of Cynthia and Plaintiff's husband having sexual intercourse. Id. Plaintiff threatened to send copies of these items to Cynthia's church and to her mother. Id.
When [Cynthia] told [Plaintiff's messenger, Debbie Campbell,] that there could not possibly be such photographs or video tapes in existence as the acts which Ms. Campbell had described had not occurred[,] Ms. Campbell replied with language referencing that the private detective retained by the Plaintiff was very skilled in his profession.
Id.
In Request for Production of Documents 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 20, 26, and 28[,] [Cynthia] sought the production of photographs, video tapes, and audio tapes from either [Byrd], [Byrd's] counsel, or the private detective retained by [Byrd]. [Byrd] told [Cynthia's] mother of the existence of such photographs. . . . [Byrd's] response in the Request for Production of Documents was that neither [Byrd], her counsel, nor the [private] detective had any photographs or audio tapes such as had been described. When the Court inquired as to why it had taken the Plaintiff almost six months from the Request For Production of Documents to advise the Defendant that no such photographs, video tapes or audio tapes existed no satisfactory response was given by the Plaintiff [Byrd] to the Court. Further, when the Court inquired of the Plaintiff [Byrd] as to why the Plaintiff [Byrd] had told [Cynthia] lies and untrue statements about the existence of the photographs, video tapes, and audio tapes[,] the response was that the Plaintiff [Byrd] wanted to "worry [Cynthia]."
Id., at 56-57 (emphasis added). It is clear from the language used by Judge Helms that he concluded a private investigator had illegally surveilled Cynthia's apartment and created images purporting to be sexual conduct when in fact, such was not the case. Id. at 49 ("Ms. Campbell replied with language referencing that the private detective retained by the Plaintiff was very skilled in his profession."). It is equally clear from his order that he concluded Cynthia had been threatened with nonexistent evidence.
On November 28, 2001, Byrd's previous attorney moved for leave to withdraw from representation noting that he could not continue as her attorney without violating North Carolina Revised Rule of Professional Conduct 3.3 concerning candor with the court. He also noted that Byrd had already retained other counsel (Diggs), and her file had been forwarded to that attorney. On December 5, 2001, Diggs filed a notice of appeal from Judge Helms' Order dismissing the case. As such, he is charged with knowledge of the contents of that Order, including Judge Helms' finding of fact that Byrd had lied about the existence of evidence in order to harass Cynthia. Truesdell v. Southern California Permanente Med. Group, 293 F.3d 1146, 1154 (9th Cir. 2002) ("It was, at best, disingenuous to claim that statistical records in support of Plaintiff's theory must exist, when all along counsel had personal knowledge of another case that disproved his statistical argument.").
Indeed, this motion should have put Diggs on notice of potential discrepancies in Byrd's version of events.
On July 24, 2002, a hearing was held before Superior Court Judge Robert D. Lewis on Cynthia's motion to dismiss Byrd's appeal of Judge Helms' Order. Transcript of July 24, 2002 Hearing before North Carolina Superior Court Judge Robert D. Lewis, attached to Defendant Cynthia Hopson's Motion for Summary Judgment. During the hearing, Leonard Poe, Cynthia's bankruptcy attorney, testified that on December 18, 2001, Cynthia filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Western District of North Carolina. Id., at 3. The initial creditor's meeting occurred in that bankruptcy proceeding on January 30, 2002, and was attended by both Diggs and Byrd. Id., at 6. On April 2, 2002, Cynthia was discharged in bankruptcy. Id. However, prior to her discharge, an adversary proceeding was filed by Diggs on behalf of Byrd on March 28, 2002. Id. The adversary proceeding alleged the same facts and claims, alienation of affections and criminal conversation, as had been dismissed by the state court and was currently pending on appeal before the North Carolina Court of Appeals. Id. Mr. Poe moved to dismiss the proceeding; and on June 19, 2002, United States Bankruptcy Court Judge George R. Hodges dismissed the proceeding without prejudice and lifted the stay so that Diggs could perfect the appeal in state court from Judge Helms' order of dismissal. Id., at 7. In the event that a judgment against Cynthia was ever obtained, Byrd's relief would have been to move to reopen the Chapter 7 discharge. Id.
However, Diggs took the position in his argument before Judge Lewis that the stay had never been lifted; he admitted that he had never moved the Bankruptcy Court for relief from the stay, stating that such an act "would be clearly unconstitutional." Id., at 23-33. On August 14, 2002, Judge Lewis entered a Memorandum of Law and Order Allowing Dismissal of Appeal ruling that on July 23, 2002, Judge Hodges had entered an order providing that "[t]he automatic stay and the discharge injunction as to [Byrd's] referenced state court claim are hereby lifted such that [Byrd] may prosecute [her] claim in state court." See Exhibit A, attached to Duncan Affidavit, supra, at 96-97. Because Byrd and Diggs did nothing to perfect the state court appeal either before or after the bankruptcy stay was lifted, Judge Lewis dismissed the appeal. Id., at 98. Despite his own conduct in failing to perfect the appeal, Diggs represented at the hearing before this Court that Byrd has never obtained a ruling on the merits of her case solely because of the state court's rulings. Transcript of Rule 11 Hearing, filed July 2003, at 51-52. The failure to perfect the appeal is indicative of two things: Diggs knew the appeal was frivolous and the conduct before the state courts was done only to harass Cynthia.
Undeterred, Byrd and Diggs filed this action less than a month after Judge Lewis' dismissal. While this Court cannot and does not sanction either Diggs or Byrd for their conduct in the state and bankruptcy courts, their behavior before those tribunals indicates a clear intent to continue to harass Cynthia through the filing and continuation of this lawsuit. Markwell, 878 F.2d at 903 ("[G]iven the background of this long-running dispute, the judge was justified in considering the filing of the Motion to Strike a Motion for Extension of Time as harassing and unprofessional conduct in his court."); In re Weiss, 111 F.3d 1159, 1170 (4th Cir. 1997). Indeed, the allegations of the complaint prove this action is nothing more than a substitute for the dismissed alienation of affections and criminal conversation action.
10. During the time frame around January, 2000, and at other times, Defendant Cynthia Hopson (Hopson) had an extra marital affair with Plaintiff's husband, Nathan Byrd.
11. Said affair was part of a scheme and plan developed by Hopson whereby Hopson sought to cause or procure a separation of the Plaintiff from her husband and, due to her intimate relationship with Nathan Byrd, allow Hopson to gain control over Plaintiff's property and business affairs.
Complaint, filed September 16, 2002, at 3.
As to Diggs, "[l]eaving aside any question of professional ethics arising from the institution of [this] suit, a lawyer should know that the law does not provide a remedy for every petty oppression, aggravating annoyance or minor threat that routinely accompanies everyday life." Fox v. Boucher, 794 F.2d 34, 38 (2d Cir. 1986). Yet, Diggs has "stubbornly refused to abandon his meritless litigation. . . ." Id.
Having distilled [Byrd's] complaint to its essentials, [the Court] finds that it remains what it was when [she] first brought suit in the [state court]: a garden variety [alienation of affections] claim. By expanding her case to include the RICO charge and other baseless claims discussed [infra], [Diggs] subjected himself to sanctions. . . . [Diggs'] professional responsibilities in this case required him to perform a reasonably thorough and objective investigation of the facts before asserting them as the bases for these causes of action. [Diggs] did not speak to a single person, apart from [Byrd], who had actual knowledge regarding the facts that purportedly supported the . . . charges. What is more, [Diggs] failed to research the law. Had he done so, he would have learned that [Byrd's] RICO [and other] claims were doomed to failure. [Diggs'] responsibility to act with professional judgment only after a thorough, reasonable and objective investigation of the claims at issue was heightened (1) because [Byrd's state court] claims were pending appeal of an adverse . . . ruling and (2) because of the extraordinary nature of the RICO allegations in this case.
Byrne v. Nezhat, 261 F.3d 1075, 1115 (11th Cir. 2001) (citations omitted; emphasis added).
In his defense, Diggs claims that before bringing this action, he spoke with 13 different individuals about the facts of the case. Some of those individuals were later deposed and their deposition transcripts have been filed in this action. The first individual is the Plaintiff whose testimony was previously referenced in the Memorandum and Opinion dismissing this action. In that opinion, the Court noted that Byrd's deposition testimony is not based on personal knowledge but on speculation and hearsay.
As to the dealing of illegal drugs from the Hopson's store, Byrd testified that it was "well known knowledge." Byrd Deposition Vol. I, at 39. When asked if she had personally witnessed such conduct, she testified that she saw Cynthia hand to a customer "what appeared to be drugs. So let me phrase it that way." Id., at 40. As for the money which changed hands, she acknowledged that the customer "may have owed her money." Id., at 41. As for the acts of vandalism, Byrd testified that "you wouldn't think a girl would do such a thing. [I]f she [Cynthia] didn't do it I'm sure that someone isn't sticking their neck out to do these things for nothing." Id., at 58. "I'd be lying through my teeth if I said I saw her do it." Id., at 146. The Hopson's, she testified, "must've known about" the illegal drugs. Id., at 63. Despite all these claims, as well as the claim that her husband had been having an affair with Cynthia, Byrd continued to do business with Hopson's Store throughout the entire time period alleged in the complaint. Id., at 94-99 ("[Y]ou continued to go to the store and trade despite the fact that in May of 2000 Cindy and Holger Nelson had called you both on the same line and threatened to kill you and discussed him being paid $10,000 to do it."). Byrd also admitted obtaining cocaine from an individual not a party to this action which she took to Sheriff Fox representing to him that it had been purchased from Cynthia. Id., at 130-31. Byrd admitted making a telephone call to Cynthia during which she threatened to kill Cynthia. Id., at 138-39. And, she admitted that she sometimes carries a .38 caliber pistol. Id., at 179. Despite her claims that Sheriff Fox refused to investigate her allegations of vandalism, she testified that after each harassing call, someone from the Sheriff's Department did come to her home. Byrd Deposition Vol. II, at 192-97, 203. In fact, because of the volume of complaints received from Byrd, Sheriff Fox requested an independent review of his department's handling of her reports of being beaten, harassing telephone calls, and vandalism. Affidavit of Steve Nix, attached to Motion of Kenneth Fox and Donald Street for Summary Judgment, filed April 4, 2003. Agent Nix, who at the time was a special agent with the North Carolina State Bureau of Investigation, reported to his superiors the following information:
During the Fall of 2000 . . . Byrd reported to the MCSD [Mitchell County Sheriff's Department] she had been assaulted by an unknown male at her privately owned pond. MCSD responded and obtained a victim interview. Based on the description of the suspect by . . . Byrd a subject had been located and presented to . . . Byrd for identification. Byrd failed to identify the subject that greatly matched her description. . . .
In late February 2001 an informant phoned the MCSD and delivered information regarding the location of a large amount of illegal drugs in the back of a truck owned by Cindi Hobson [sic]. Follow-up telephone calls from the informant added suspicion to the information and it was determined the drugs may have been placed in the truck by the informant. Byrd made herself the go between for the informant and the MCSD. The informant never appeared for debriefings or undercover controlled buys. . . . Assistant District Attorney Ted Mcentire refused prosecution on this case.
. . .
During the summer months of 2001 . . . Byrd reported to the MCSD three separate larcenies from cabins on her property. On each of these occasions a Deputy and a Detective responded only to find no signs of forced entry. . . .
. . .
During April and May 2001 . . . Byrd taped telephone calls which she reported to be harassing and included threats made against . . . Byrd at the hands of Cindi Hobson [sic]. Sheriff Fox stated the voice on the tapes matched the voice of the informant from the drug issue described earlier.
. . .
Byrd reported to the MCSD she had found a bullet hole in the side of her house which she stated came from a drive by shooting several months earlier that had not been reported. Sheriff Fox contacted the NCSBI [North Carolina State Bureau of Investigation] to aid in the removal of the bullet from the house but the bullet hole appeared to be that of a nail in the gutter not a bullet. Id., at Exhibit A.
Memorandum of Opinion, filed May 23, 2003, at 15-16.
Donna Beam, who at the time of her deposition had just pled guilty to a drug charge, testified that she borrowed $10,000 from Byrd to pay for an attorney to represent her on that charge. Deposition of Donna Marie Beam, dated February 20, 2003, at 10. Beam also testified that Byrd is her friend and is "closer to me than my family." Id., at 23. "[S]he's all I've got[.]" Id., at 24. Beam testified that at a time not encompassed by the allegations of the complaint, she had abused crack cocaine and saw Cynthia sell drugs to Kevin Hughes on a single occasion and to Ricky Burleson on separate single occasion. Id., at 25, 27. "It looked like what you would call methamphetamine, crank." Id., at 28 (emphasis added). "I said, I think that was just a drug deal." Id., at 30 (emphasis added). Later in her testimony, Beam testified that when she bought cocaine from Cynthia, it was never done out in the open. Id., at 147. "Drug dealers don't do stuff out in the open." Id.
Q. Do you have any personal knowledge about Kenneth Fox or any member of the Mitchell County Sheriff's Department receiving money from any person at all?
A. The only thing that I can say in relation to that is I would get paranoid when Cindy and I were doing drugs, and I said aren't you afraid you'll get busted, or something like that will happen? And she said no. It's all been took care of. And I said what do you mean? And she said you don't have to worry about the law here.
Q. Did she ever say to you that she had paid any sums of money to any person?
A. She never said no sums, but she said they had been bought off, she had bought them off, and not to worry about it. . . . I'm not sure exactly how she worded it, but it was clear that somehow she had got herself protected from even being busted.
Q. Did she actually use the word "bought" off?
A. I don't think so. No.
Id., at 31-32. Beam also testified that she had no personal knowledge about gambling at the Hopson store, "just rumor." Id., at 53. She had no personal knowledge of any conspiracy or agreement between the Mitchell County Sheriff's Department and any member of the Hopson family or Holger Nelson. Id., at 63. She did not know Holger Nelson. Id. She has never seen him. Id., at 65. She has never heard him speak. Id., at 66. She has no knowledge of who assaulted Byrd. Id., at 77. Beam had no knowledge other than rumor that Cynthia's parents knew about the "affair" and assisted her in it. Id., at 91. She could only "assume" that the Hopsons knew Cynthia was selling drugs and gambling at the store. Id., at 92. Beam had no knowledge that the Hopsons were involved in a conspiracy to harm Byrd. Id., at 94. She had no knowledge that money from illegal conduct was used to pay to have Byrd killed. Id., at 95. Beam had never seen any photographs or video tapes of Cynthia and Nathan Byrd having sex. Id., at 96. In addition to the $10,000 loan from Byrd, Beam consistently receives loans from Byrd. Id., at 108. Finally, Beam asked Cynthia's attorney, "Why, the way you propose your questions, would anybody want to tell you the truth about anything illegal?" Id., at 161.
Debbie Campbell Lewis testified that Byrd is her "second mother." Deposition of Debbie Campbell Lewis, dated February 21, 2003, at 12. Lewis has never seen Cynthia use drugs. Id., at 26. She never saw drugs being sold at the Hopson's store but she was "told that it was going on." Id., at 28. During the time period at issue in this action, Lewis did not see drugs or gambling at the store. Id., at 32-33. Lewis had no knowledge of a conspiracy between the Sheriff's Department and the Hopsons or Nelson. Id., at 37. Lewis does not know Nelson and has never met him. Id., at 64-65. She has never heard his voice or seen his face. Id., 65-66. Lewis had no personal knowledge that money from illegal drugs or gambling had been used by the Hopsons to pay to have Byrd killed. Id., 119-20. In fact, any dispute between Cynthia and Byrd did not begin until February 2001. "It occurred after that they were confronted with the affair. That's when it all started, because everyone was — was friends up until then." Id., at 152. Despite Lewis' claims that she heard harassing telephone calls from Cynthia to Byrd after this time, Byrd did not record the calls. Id., at 152-53. She also was not aware of whether Byrd had asked the telephone company to trace these harassing calls. Id., at 156. Contrary to the findings made by Judge Helms, Lewis testified that she had no knowledge of Byrd having hired a private investigator who photographed Cynthia. Id., at 161-62.
This is the same individual who was referred to by Judge Helms as Debbie Campbell. Again, he concluded that Campbell told Cynthia that a private investigator had placed a camera in her apartment and had "creatively" photographed her. Exhibit A, Order of Judge Michael Helms, entered November 6, 2001, attached to Affidavit of Michele Duncan, attached to Cynthia Hopson's Motion for Summary Judgment, filed April 4, 2003, at 49.
In contrast to her deposition testimony that she had never seen drugs being sold at the store, Lewis provided an affidavit subsequent to that testimony in which she avers that "I have been at Hopson's Store on numerous occasions when I observed Cindy exchange small plastic bags of cocaine for money." Affidavit of Debbie C. Lewis, filed July 15, 2003, ¶ 3. Despite her deposition testimony that she had never witnessed gambling at the store, Lewis averred that "I have observed gambling machines and `tip boards' in Hopson's Store." Id., ¶ 4.
Brandon Buchanan was a deputy sheriff with the Mitchell County Sheriff's Department during the tenure of Vernon Bishop as sheriff. Deposition of Brandon Lee Buchanan, dated February 20, 2003, at 5-8. Byrd and Sheriff Bishop are related. Id. When Sheriff Fox took over after Bishop was investigated by the SBI, Buchanan was terminated from the Department by Fox. Id. Buchanan works for Byrd doing landscape work and providing security services at her real estate. Id., at 9. During the time that Buchanan worked with Deputy Street, it was his opinion that Street was a good officer and he never saw Street use excessive force. Id., at 16-17. In the year before his deposition, which was taken in February 2003, he has answered the telephone at Byrd's house and has heard harassing calls made by both males and females. Id., at 24-25. Buchanan would not recognize the voice or face of either Cynthia or Nelson. Id., at 26. He suggested that Byrd change her telephone number but that has not been done. Id., at 27. Buchanan further testified that Byrd's home telephone has the caller identification feature which discloses the number of the caller before the phone is answered and it may have the "star 69" feature which identifies the number of the telephone from which a call has been received. Id., at 28-29. Although a trace was placed on Byrd's phone by the Sheriff's Department, identification of the telephone from which the calls were made has not occurred. Id., at 64-65. However, Buchanan testified that the trace does not work unless the owner of the telephone who receives the call telephones the call into the trace operator after receipt of the call. Id.
Despite the fact that Diggs stated in Rule 26 disclosures that Buchanan's brother had purchased drugs from Cynthia, Buchanan testified that "from what my little brother's told me, he didn't purchase any drugs from Cindy Hopson." Id., at 30. There was also a statement in that disclosure that prior to an accident sustained by Buchanan's brother, he had purchased and used drugs from Cynthia. Id., at 32. Buchanan testified that this was untrue: "If you'll take the time, in his accident, they done (sic) a blood test on him at the Johnson City Medical Center, and he was clean. He didn't have anything on him, no alcohol, no marijuana, no nothing." Id., at 33. Buchanan has never personally witnessed any gambling, drug dealing or bribes to the Sheriff's Department from the Hopsons or Cynthia. Id., at 34. He has no knowledge of a departmental policy or practice of ignoring or harassing Byrd. Id., at 35. He has no personal knowledge that the Hopsons knew of the "affair," knew of or were engaged in drug dealing and gambling, had a conspiracy with the Sheriff's Department or with Nelson, or that any funds were provided to Nelson to kill Byrd. Id., at 59-61. As to the allegations that Deputy Street used excessive force against Byrd, Buchanan knew nothing other than that which had been told to him by Byrd, "but that would be third party, and I can't testify to it." Id., at 78. Nathan Byrd testified that he does not know Nelson, has never seen him and has never heard him speak. Deposition of Nathan Byrd, dated February 21, 2003, at 11-20. One night about four months after Byrd was assaulted, she answered the telephone at her home and after speaking with someone, handed it to Nathan. Id. Cynthia was on the phone and said that Nelson was at her home. Id.
A. And I said, "Well, put him on the phone if that's Holger Nelson." And he said, "Yes, this is Holger Nelson." . . . I said — he said that Cindy Hopson give (sic) him $10,000, and said he'd spent it — the money. And that he had to do away with Betty Byrd, which is my wife. . . . I said, "[w]ell, if you're so brave about it, why don't you just come on over here and meet me in the road, 226 or" — and says why don't you come on over here in front of my house, it's 325. I said, "If you've got anything against me — I don't know you, but the way you're talking you seem to be like you're a bad ass, big bad ass, just come on down. We'll try to straighten this out." And he said, "No, you sound like you're a bad ass." I said, "No, I'm not no bad ass." But ever what it is, there had to be a winner, me or you one. And he said, "Well, I think I'll be the winner." And I said, "It won't make no difference to me." I said, "You can't die but one time."
Id., at 14. During the state court action for alienation of affections, Nathan denied under oath on the witness stand that he had ever had a sexual relationship with Cynthia. Id., at 81-83. During the deposition taken in this action, Nathan testified that only on one occasion had he had sex with Cynthia. Id. Nathan also testified that he had a particular fondness for Cynthia's daughter, who was involved in horse riding and competitions. Id., at 91-93. Nathan gave Cynthia approximately $6,000 to use for horse competitions. Id. Included in that total was the sum of $3,500 which was the cost of a horse which Nathan purchased as a gift for her daughter. Id.
Mark Forbes, who is Nathan's nephew, is the accountant for the Byrds. Deposition of Mark Brian Forbes, dated February 20, 2003, at 6. After Forbes filed for bankruptcy in 1996, the Byrds gave him financial assistance to get back on his feet. Id., at 38. They gave him a $15,000 loan to invest in real estate. Id., at 39. Forbes had no personal knowledge, other than what had been told to him, about a conspiracy with the Mitchell County Sheriff's Department, with the Hopsons, with Cynthia, or with Nelson. Id., at 59-61. He had no personal knowledge that drugs or gambling occurred at the Hopsons' store. Id., 61-62, 136. Forbes testified that he does not have any personal knowledge of a scheme developed by Cynthia to lure Nathan away in order to gain control over Byrd's property. Id., at 127. He had no personal knowledge of a relationship between Cynthia and Street or of a policy of the Sheriff's Department to assist Cynthia. Id., at 129. At the time of his deposition, Forbes had made approximately $200,000 from the real estate investment for which Byrd initially loaned him $15,000. Id., at 139-40.
This Court previously noted in the Memorandum of Opinion that affidavits presented by Diggs which purported to have been signed by Willard and Ruby Bennett had no evidentiary value. Memorandum of Opinion, at 21 n. 7. At the hearing in this matter, Diggs presented an additional affidavit from Ruby Bennett in which she claims to have known Nelson for years and to have recognized his voice in October 2001 from a tape recording played to her by Byrd.
Affidavit of Ruby Bennett, dated June 28, 2003, attached to Diggs' Return to Order to Show Cause.
Diggs also identified Rick Lamb and Anthony Raburn as individuals to whom he spoke before bringing this action. Diggs' Return to Order to Show Cause, at 4. Nothing has ever been presented from Rick Lamb or Anthony Raburn, although there are allegations contained within the pleadings that each individual has been convicted of drug crimes.
As will be explained below, Anthony Raburn appears to have posed as Nelson in the staged telephone calls which Byrd recorded and which are referenced herein.
Attached to Diggs' response to the Order to Show Cause is an affidavit from Brandie Carpenter in which she avers that after being arrested by the Yancey County Sheriff's Department, "Sheriff Fox told me that if I would state that Betty Byrd was involved in drug trafficking in Mitchell County, and if I would implicate my sister in a jail fire, he would ensure my quick release and led me to believe that charges against me would be dismissed." Affidavit of Brandie Carpenter, dated June 17, 2003, attached to Diggs' Return to Order to Show Cause, ¶ 4 (emphasis added).
It is axiomatic that a district court must make credibility determinations when ruling on the evidence submitted in support of and in opposition to Rule 11 sanctions. Cooter Gell v. Hartmarx Corp., 496 U.S. 384, 402 (1990). In deciding whether an attorney or his client has violated Rule 11, "a court must make some assessment of the signer's credibility." Id. Indeed, rulings on such motions "are fact-specific and almost invariably require assessments of credibility." In re Downs, 103 F.3d 472, 481 n. 3 (6th Cir. 1996) (internal quotations and citations omitted); accord, In re Cascade Energy Metals Corp., 87 F.3d 1146, 1149 (10th Cir. 1996); Caisse Nationale de Credit Agricole-CNCA, New York Branch v. Valcorp, Inc., 28 F.3d 259 (2d Cir. 1994); In re Kunstler, 914 F.2d 505 (4th Cir. 1990). The record shows that the credibility determination in this case goes squarely against Byrd and Diggs. First of all, Byrd's story is outrageous in tone, nature and demeanor. Byrne, supra; Kunstler, supra, at 515 ("Rule 11 sanctions are appropriate when a lawyer attempts to use discovery to support outrageous and frivolous claims for which there is no factual support."). With the exception of her deposition testimony, Diggs never placed a sworn statement from her as to any specific topic. And, as noted, her deposition testimony was equivocal and based on hearsay. Her purported harassing telephone calls appear to have the product of her own creation. She had previously used Raburn to plant drugs at Cynthia's property. Moreover, Sheriff Fox identified the voice on the purported tape recording of Nelson's call as the voice of Raburn. Nor has Byrd or Diggs provided a logical explanation as to why a man who had been hired to kill a woman and who attempted and failed to do so, would either the same night or four months later, depending on which version is used, call the woman and tell her he was going to have to finish the job. Even more ludicrous is the idea that such a man would identify himself to his purported victim and that his co-conspirator (Cynthia) would place the call and identify herself as being part of the conspiracy. It is also absurd that Byrd meticulously kept recordings of the allegedly harassing telephone calls, but did not properly use the tracing procedures to identify the callers outlined by either the telephone company or the Sheriff's Department. As a result, no one was ever able to ascertain the telephone numbers from which the calls were being made. This is not surprising since the calls most certainly were the creation of Byrd and her compatriots. And, although Nelson allegedly tried to kill her on May 1, 2000, and called her that very night, these calls did not become harassing until after Byrd confronted her husband in February 2001 about his alleged affair with Cynthia. Nor did Byrd take any steps to halt the calls, such as changing her telephone number. In other words, these manufactured harassing telephone calls were designed to prove the very allegations Byrd had outlined in the complaint of this lawsuit.
The testimony of Beam is equally unavailing. A convicted drug dealer, she owed $10,000 to Byrd for her legal fees in that matter and continues to receive money from Byrd on a regular basis. Thus, it is not surprising that she considers Byrd to be "family." Moreover, her testimony was based on things that "looked like" a drug and an exchange that she "thought" was a drug deal. Yet, she had no personal knowledge of any of the allegations of the complaint which would support the causes of action stated therein.
Lewis' testimony is of a similar ilk. And, her most recent affidavit is totally discredited because she contradicts her earlier sworn testimony. Rohrbough v. Wyeth, 916 F.2d 970, 975 (4th Cir. 1990) ("[The] affidavit is in such conflict with [her] earlier deposition testimony that the affidavit should be disregarded as a sham issue of fact. . . . `If a party who has been examined at length on deposition could raise an issue of fact simply by submitting an affidavit contradicting his own prior testimony, this would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact.'" (quoting Barwick v. Celotex Corp., 736 F.2d 946, 960 (4th Cir. 1984))); accord, Hernandez v. Trawler Miss Vertie Mae, Inc., 187 F.3d 432, 438 (4th Cir. 1999). Buchanan, who was fired by Sheriff Fox, clearly displayed his animus toward the Sheriff. Nonetheless, his testimony failed to establish any of the myriad claims. Unique to the "witnesses" interviewed by Diggs, he openly acknowledged that the only knowledge he had about the case came from hearsay and was inadmissible in court. Nor did the testimony of Forbes establish a good faith filing. He had no first hand knowledge of any evidence which would support the claims raised, although he had managed to make $200,000 in profit from a real estate deal introduced to him by Byrd.
The affidavit of Carpenter is as ludicrous as Byrd's allegations. It is appalling that anyone, much less Diggs, who it is presumed drafted the document, would expect a district court to believe that a sheriff would offer to drop charges in a jurisdiction over which he had no control in exchange for the defendant's implication of her own sister. As for the testimony of Nathan Byrd, there is really no need for discussion. The wildly insane nature of the alleged telephone call from Nelson only shows that Byrd either duped her own husband or enlisted him in her journey of deceit and harassment.
In short, the Court concludes that Diggs did not make an objective prefiling investigation but chose instead to rely on the outlandish accusations of a woman with a vendetta. "The fact that so many allegations in the complaint lacked a basis in law or in fact strongly supports the court's finding of improper purpose," such as harassment. Kunstler, 914 F.2d at 519. "Blind reliance on the client is seldom a sufficient inquiry." Id., at 514 (internal quotations and citations omitted). It is of no moment that Diggs may have also consulted the other members of Byrd's menagerie. "The [allegations] provide a false foundation for [Byrd's] allegation of a county-wide `conspiracy,' and are central to the complaint." Id. No attorney conducting a "reasonable, open-minded investigation" could have concluded that these claims fell within "the scope of what could be properly pled within the confines of Rule 11." Byrne, 261 F.3d at 1117.
Moreover, even if Diggs could show an adequate prefiling investigation, because the facts as alleged failed to state a claim for relief, it was "irrelevant whether [Diggs] conducted the requisite Rule 11 pre-filing investigation." Id., at 1107. As to Byrd, "she knew or should have known that the allegations in the complaint were frivolous." Id., at 1117. It is clear that she "misrepresent[ed] facts in the pleadings." Id., at 1118. It is equally clear that she was the "`mastermind' behind the frivolous case." Id. While Diggs obviously came up with the legal theory of using a civil RICO claim, Byrd provided the outlandish factual allegations to support such a claim. Id., at 1088 (allegations in a complaint that plaintiff's physician had implanted Estradiol pellets into "hundreds if not thousands of women without their knowledge that this hormonal implant was not approved" and that one of the physician's partners was not a medical doctor). "Moreover, [such allegations] typified the harassing, bad faith nature in which [Byrd and Diggs] prosecuted this case." Id., at 1112; Kunstler, supra ("Repeated filings, the outrageous nature of the claims made, or a signer's experience in a particular area of law, under which baseless claims have been made, are all appropriate indicators of an improper purpose.").
In response to the Order to Show Cause, Diggs also responded it is not a violation of Rule 11 simply because the Court disagrees with his legal arguments. "Simply saying [an issue is complex] does not make it so." Christian, 286 F.3d at 1129. There is nothing complex about this case except the "multitudinous efforts [of Diggs and Byrd] to circumvent the [state court ruling] and to expand the scope of an already frivolous suit. At some point, enough is enough." Id. For these reasons, and those stated below, the Court finds that both Byrd and Diggs should be sanctioned for initiating and continuing this action and for filing pleadings in support thereof. Buster v. Greisen, 104 F.3d 1186, 1190 n. 4 (9th Cir. 1997) ("Although prior to the [1993] amendments conduct was measured only at signing, Rule 11 now authorizes sanctions for `presenting to the court (whether by signing, filing, submitting, or later advocating)' a document otherwise sanctionable." (Internal citations omitted.)); Turner v. Sungard Bus. Sys., Inc., 91 F.3d 1418, 1422 (11th Cir. 1996) ("That the contentions contained in the complaint were not frivolous at the time it was filed does not prevent the district court from sanctioning Penick for his continued advocacy of them after it should have been clear that those contentions were no longer tenable.").
3. As to the attorneys and the law firm, initiating and continuing this action when there was no legal basis for a civil RICO cause of action against the Defendants.
4. As to the Plaintiff, making allegations relating to the RICO claim without evidentiary or other support.
In this Court's opinion dismissing this claim, it was noted that
"A private RICO plaintiff only has standing to bring suit if [she] can show damage to `business or property' proximately caused by the defendant's RICO violation." Potomac Elec. Power Co. v. Electric Motor Supply, Inc., 262 F.3d 260, 264 (4th Cir. 2001), cert. denied, 535 U.S. 927 (2002). "RICO confers standing on `any person injured in his business or property,' not any person who can quantify the amount of the injury." Id., at 265. Neither extreme mental anguish nor pecuniary loss stemming from personal injury confers standing sufficient to prosecute a private RICO claim. Bast v. Cohen, Dunn Sinclair, P.C., 59 F.3d 492 (4th Cir. 1995). As a result, Plaintiff's RICO claim is invalid. Since the substantive RICO claim is invalid, the RICO conspiracy claim is also invalid. G.E. Investment Private Placement Partners II v. Parker, 247 F.3d 543 (4th Cir. 2001).
Memorandum of Opinion, at 10. In response to the Order to Show Cause, Diggs argues that he had evidence of conduct of an enterprise which engaged in a pattern of racketeering and that Byrd had standing to bring the action. Diggs' Return to Order to Show Cause, at 14. Citing portions of Byrd's deposition, he claims that Cynthia paid or bribed Defendant Fox for the freedom to deal illegal drugs and to conduct illegal gambling at her parents' store; vandalized Byrd's property; paid Defendant Nelson to kill Byrd; made harassing telephone calls to Byrd; knew in advance that Defendant Street would assault Byrd at the July 2002 hearing; and demanded $10,000 from Byrd in exchange for leaving her alone. And, having been educated by the Court's Memorandum of Opinion, Diggs now claims that Byrd was injured because she is a self-employed realtor, Cynthia's conduct was designed to gain control over Byrd's financial kingdom, and the vandalism damaged her real estate. See, Memorandum of Opinion, at 14; Diggs' Return to Order to Show Cause, at 16.
The citations to Byrd's deposition are discounted since the Court has already determined that her testimony is not credible. Diggs has also cited incomplete portions of the depositions of Beam and Lewis for the proposition that Cynthia was bribing Sheriff Fox to allow her to run a drug and gambling operation from the store. Diggs' Return to Order to Show Cause, at 15. The complete portion of Beam's deposition, quoted above, ends with the conclusion that Cynthia never actually admitted "buying off" the Sheriff. Beam Deposition, at 32. The statement attributed to Lewis is equally unavailing.
The allegations of the complaint relating to the RICO claim and Byrd's standing to bring it are:
67. Plaintiff has standing to assert this cause of action because the proceeds and gains of Hopson's activity, above described, have been used to expressly target this Plaintiff and to harm her.
68. As a direct and proximate result of the defendants' conduct, Plaintiff has suffered actual damages in the form of physical injury, mental anguish, public embarrassment and humiliation, and loss of the enjoyment of life.
69. Plaintiff is informed and believes she is entitled to her actual damages plus treble damages and the costs and expenses of this action, including attorneys' fees.
Complaint, at 12-13. At no time did Diggs amend or move to amend the allegations of the complaint to allege injury to business under the RICO claim. He now argues that paragraph 11 of the complaint (contained under the heading "Background") alleges that Cynthia's conduct in general was designed to "procure a separation of the Plaintiff from her husband and, due to her intimate relationship with Nathan Byrd, allow Hopson to gain control over Plaintiff's property and business affairs." Id., at 3; Diggs' Return to Order to Show Cause, at 17.
[Byrd's] complaint contained [18] pages, [99] paragraphs, and [six causes of action]. Counts [2 through 6] incorporated by reference all antecedent paragraphs, such that [Count 6] was an amalgamation of everything in the complaint. To say that the allegations of the complaint were vague and ambiguous — leaving the reader to guess at precisely what the plaintiff was claiming — is an understatement.
. . .
[Courts have] labeled pleadings such as [Byrd's] complaint . . . "shotgun" pleadings. . . . Where, as here, each count incorporates every antecedent allegation by reference, the defendant's affirmative defenses are not likely to respond to a particular cause of action but, instead, to the complaint as a whole. Such disjointed pleadings make it difficult, if not impossible, to set the boundaries for discovery.
. . .
Litigating a case framed by shotgun pleadings obviously harms one or both of the parties. Why, then, would a lawyer engage in shotgun pleading? Plaintiffs file shotgun complaints and include frivolous claims to extort the settlement of a meritorious claim; worse yet, they file shotgun complaints to extort the settlement of unmeritorious claims, as demonstrated in this case.
Byrne, 261 F.3d at 1128, 1129, 1130.
The allegations in paragraphs 67 through 69 show that counsel had no idea, when he drafted and filed this complaint, that RICO applies only when damage to property can be shown. His attempts now to bootstrap earlier allegations of the complaint into that claim are spurious and disingenuous. Moreover, his citation to Byrd's deposition testimony is incomplete. She actually testified as follows:
Q. The question was: State the sum or sums plaintiff claims to have lost by reason of being unable to follow usual occupation. Your answer was — I'm just going to paraphrase — that you haven't lost any yet but you might lose some in the future as a result of your complaints in this lawsuit. Is that accurate?
A. That's accurate.
Deposition of Betty R. Byrd, dated February 19, 2003, at 77. Byrd's answers to interrogatories, dated February 17, 2003, and prepared by Diggs, show that as late as February of this year, Diggs still had no idea that personal injury was insufficient to state a civil RICO claim.
Plaintiff's Answers to Interrogatories Propounded by Jack Hopson and Barbara Hopson, attached to Plaintiff's Response to Defendants' Motion for Protective Order, filed March 20, 2003.
11. State with specificity complete factual basis for the allegations contained in paragraph 67 of Plaintiff's Complaint [which alleges that Byrd has standing to bring a private RICO action].
Answer: Nelson assaulted the Plaintiff and attempted to kill her. It is this conduct which gives Plaintiff standing to assert this cause of action.
. . .
20. State with specificity complete factual basis for the allegations contained in paragraph 76 of Plaintiff's complaint [alleging common law conspiracy].
Answer: Plaintiff was injured in her marriage.
. . .
31. State the dates between which plaintiff was unable to follow usual occupation; and did plaintiff['s] employer compensate for those days?
Answer: Plaintiff was unable to work for one month following the use of excessive force by Donald Street. However, because Plaintiff is self employed, she is never compensated for days she is unable to work.
32. State the sum or sums plaintiff claims to have lost by reason of being unable to follow usual occupation.
Answer: Plaintiff has not lost income as yet. However, this issue remains unresolved. Plaintiff sales (sic) land to individual purchasers and developers. Generally, she is required to accompany prospective buyers to view the land. This requires that she be able to hike through the terrain as required. Plaintiff will not be able to do so if her leg is amputated.
33. Set forth in detail plaintiff['s] present complaints relating to the incident complained of.
Answer: Plaintiff is experiencing severe emotional distress and physical discomfort in her right knee and lower extremity. She is unable to walk for any significant period of time due to pain and weakness in the knee area.
Id., at 11, 19 (emphasis added).
Clearly, had Diggs conducted an adequate prefiling investigation, he would have known that in order to state a private claim under RICO he had to allege that Byrd suffered injury to her business or real estate. "[I]f, after dismissing a party's claim as baseless, the court finds that the party's attorney failed to conduct a reasonable inquiry into the matter, then the court is obligated to impose sanctions even if the attorney had a good faith belief that the claim was sound." Byrne, 261 F.3d at 1105-06. Diggs can hardly be excused by arguments posed after the Court has educated him as to his legal errors. Binghamton Masonic Temple, Inc. v. Bares, 168 F.R.D. 121, 128 (N.D.N.Y. 1996) ("Yet, the Plaintiffs, with notice from the Court that their claim was unsubstantiated by fact or law, continued to pursue their claims."). Indeed, he continues to argue that the Court has made an erroneous ruling.
Assuming arguendo that Diggs' argument that the "`enjoyment of life' language from Plaintiff's complaint . . . is by itself, broad enough, . . . to encompass an injury to business activity," the evidence remains woefully insufficient to set out a RICO claim. Diggs' Return to Order to Show Cause, at 19. Diggs argues that the evidence shows "that Hopson (1) paid (or bribed) defendant Fox for freedom to deal in a controlled substance and conduct illegal gambling activity." Id., at 14. As noted above, with the exception of Byrd's incredible testimony, there is no credible evidence of this conduct, only speculation and inference. Diggs also claims that Hopson vandalized or hired someone to vandalize Byrd's property. Id. Yet again, this allegation is not stated in the complaint under the RICO cause of action. The complaint refers only to the alleged contract to kill Byrd. The pattern, Diggs argues, is shown by the bribery of Fox, the sale of illegal drugs, the operation of an illegal gambling business, and the proceeds of all this illegal activity were used to pay to have Byrd killed. Id., at 15-16. But, as noted above, not one witness, including Byrd, conclusively testified to personal knowledge of these events. "[T]he existence of numerous irrelevant, unsubstantiated, and sensational allegations is an appropriate factor for a district court to consider in determining whether the pleading as a whole lacks adequate factual [and legal] foundation." Kunstler, 914 F.2d at 515.
As noted by the Fourth Circuit in the case relied upon by the undersigned to dismiss the RICO cause of action:
This lawsuit has all the markings of a vendetta. It arises from the dissolution of an extramarital affair and business relationship between Mr. Bast and Ms. Madonna Pettit. Since the break-up, Bast has filed five lawsuits against Pettit. Now, in the present action, Bast files suit against those who have provided Pettit with legal representation and against her friend. . . .
Finally, Bast does not have standing to assert a claim for civil damages under [RICO] because he fails to allege any "injur[y] to his business or property" that was proximately caused by the alleged RICO violation. At most, Bast pleads that he "suffer[ed] extreme mental anguish" when he learned of Pettit's recordings. An allegation of personal injury and pecuniary losses occurring therefrom are not sufficient to meet the statutory requirement of injury to "business or property."
Bast v. Cohen, Dunn Sinclair, P.C., 59 F.3d 492, 494, 495 (4th Cir. 1995) (citations omitted). Nothing put forth in Diggs' response to the Order to Show Cause or at the hearing has established a factual or legal basis for bringing and continuing a civil RICO cause of action against the Defendants. Again, it is noted that the sanctions imposed against Byrd are not for the filing of a legally insufficient complaint but for the continued advocation of facts which do not support a claim. Fed.R.Civ.P. 11(b)(3).
5. As to the attorneys and the law firm, initiating and continuing the action when the statute of limitations had clearly run as to the allegations of assault and battery.
6. As to the Plaintiff, making allegations against Defendant Nelson without evidentiary or other support.
Diggs responded to the Order to Show Cause by stating that "an action for assault accrues when the assault occurs (if the identity of the attacker is known), or, if unknown, then when the identity of the attacker becomes known. There is no case law in North Carolina which holds otherwise." Diggs' Return to Order to Show Cause, at 22.
The provisions of Rule 11 dictate that in presenting a [complaint] to a court, an attorney represents that the "legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law." Fed.R.Civ.P.11(b)(2). An assertion of law violates Rule 11(b)(2) when, applying a standard of objective reasonableness, it can be said that a reasonable attorney in like circumstances could [not have] believe[d] his actions to be . . . legally justified. A legal contention is unjustified when a reasonable attorney would recognize [it] as frivolous. Put differently, a legal position violates Rule 11 if it has absolutely no chance of success under the existing precedent.
In re Sargent, 136 F.3d 349, 352 (4th Cir. 1998) (internal quotations and citations omitted). Despite clear legal precedent, Diggs also argues that "North Carolina law does acknowledge that the limitations period for assault and battery does not begin to run until the action accrues," citing Wilson v. Crab Orchard Dev. Co., 276 N.C. 198, 171 S.E.2d 873 (1970), and concluding that case held "that a statute of limitation (sic) begins to run when the plaintiff's right to maintain an action for the wrong accrues." Diggs' Return to Order to Show Cause, at 21. That case, however, did not involve assault and battery but an action asserting a transfer of savings and loan certificates to a corporate assignee in exchange for stock was an assignment for the benefit of creditors. And, the court actually held: "Ordinarily, the period of the statute of limitations begins to run when the plaintiff's right to maintain an action for the wrong alleged accrues. The cause of action accrues when the wrong is complete, even though the injured party did not then know the wrong had been committed." Id., at 214, 171 S.E.2d at 883 (emphasis added). Diggs, in his response to the Court's Order to Show Cause why he should not be sanctioned, failed to provide the full quotation from the court's decision. And, he argues that "North Carolina courts have held that when an action is latent, or the cause is unknown, the action does not `accrue' until both the injury and its cause have been discovered," and cites a medical malpractice case, Hussey v. Montgomery Mem'l Hosp., Inc., 114 N.C. App. 223, 441 S.E.2d 577 (1994), in support of his position. Diggs' Return to Order to Show Cause, supra.
The undersigned cannot find that such a posture is tantamount to a nonfrivolous argument for the extension, modification or reversal of existing law. The Court has not found a single case adopting the position urged by Diggs, that is, that the statute of limitations does not begin to run on an assault or battery cause of action until the identity of the attacker has been discovered. Blanton v. Alley, 2003 WL 21152546 (Oh. 2003) (statute of limitations not tolled by any uncertainty as to the identity of victims' assailants); accord, Grimes v. Suzukawa, 551 S.E.2d 644 (Va. 2001); Doe v. Archdiocese of Milwaukee, 565 N.W.2d 94 (Wis. 1997); K.G. v. R.T.R., 918 S.W.2d 795 (Mo. 1996); Bernson v. Browning-Ferris Indus., 873 P.2d 613 (Calif. 1994) (tolling occurs only where the defendant intentionally conceals his identity); Slack v. Kanawha County Housing Redev. Auth., 423 S.E.2d 547 (W.Va. 1992) (statute runs from the time the victim knew or in the exercise of diligence should have known the identity of the attacker).
There is no doubt that at the time the complaint was filed, Diggs' position that a cause of action for assault and battery existed was not warranted by existing law.
A legal contention is not warranted by existing law if it is based on legal theories that are plainly foreclosed by well-established legal principles and authoritative precedent, unless the advocate plainly states that he or she is arguing for a reversal or change of law and presents a nonfrivolous argument in support of that position. A legal contention that is made in spite of the obvious preclusive effect of a judgment in prior litigation is not warranted by existing law.
2 Moore's Federal Practice, § 11.11[7][a] (Matthew Bender 3d ed.).
The Court finds, from its review of the voluminous record, that counsel made the "good faith extension" argument only in response to the specter of sanctions. Miltier v. Downes, 935 F.2d 660, 664 (4th Cir. 1991). And, in making the argument, Diggs has been less than forthcoming in citing case law to the Court. Diggs will be sanctioned pursuant to Rule 11(b)(2) for filing the claims for assault and battery.
In addition to the fact that there is no legal argument, Byrd testified that on the evening of her assault on May 1, 2000, Cynthia and her attacker called her at home.
And matter of fact the first time that he called me, Sheriff Fox's wife . . . and Nathan, we were all setting (sic) at the table in the breakfast room and I was not in good shape. I had just come from the hospital, had been brought from the hospital that night.
Byrd Deposition, at 82.
Q. Now, when did you get the next call?
. . .
A. It was about a week.
Id., at 84-85.
A. And that call, it was the same old stuff, only Cindy talked to me and the one that is supposed to be Mr. Nelson talked to me, both of them.
Id., at 87.
Q. Well, what did the man say?
A. I am gonna finish you off. Then he set in about spending the money. That he would meet me, he and Cindy, on top of the mountain.
Id., at 88. By May 2000, Byrd knew that Cynthia was involved in the purported assault. The statute of limitations as to her began to run as of that month. Byrd also testified that in June 2001, Sheriff Fox identified the voice on one of the tapes which she recorded as that of Nelson. Id., at 123-24. This claim also was clearly time barred.
Moreover, Byrd had no personal knowledge that Nelson assaulted and battered her.
Q. [T]he only thing that makes you think it was Chuck [Nelson] that assaulted you is because Ken Fox identified the voice and Ruby and Willard Bennett said that the tape sounded like his voice. Is that right?
A. They said it was Chuck Nelson.
. . .
Q. But so that's all you're basing your claim against Mr. Nelson is because of what you were told by Sheriff Fox and by the two Bennetts about hearing the voice and identifying it; is that right?
A. Right.
Q. Okay. And if those folks are wrong about identifying the voice as Chuck's, then Chuck's not the man, is he?
A. No.
Id., at 269-70. Byrd went on to admit, "I could be accusing an innocent man. How do I know?" Id., at 289.
There is absolutely no admissible evidence in this action showing that Nelson was the man who allegedly assaulted Byrd on May 1, 2000. None of the people deposed or interviewed knew him with the exception of the Bennetts. Their affidavits, claiming to have heard a tape recording of Nelson's voice, cannot be given any weight because the tape recording which they claim to have heard has never been authenticated. Indeed, it appears most probable that the conclusion reached by the SBI is the correct one:
During the Fall of 2000 . . . Byrd reported to the MCSD [Mitchell County Sheriff's Department] she had been assaulted by an unknown male at her privately owned pond. MCSD responded and obtained a victim interview. Based on the description of the suspect by . . . Byrd a subject had been located and presented to . . . Byrd for identification. Byrd failed to identify the subject that greatly matched her description. . . .
In late February 2001 an informant phoned the MCSD and delivered information regarding the location of a large amount of illegal drugs in the back of a truck owned by Cindi Hobson [sic]. Follow-up telephone calls from the informant added suspicion to the information and it was determined the drugs may have been placed in the truck by the informant. Byrd made herself the go between for the informant and the MCSD. The informant never appeared for debriefings or undercover controlled buys. . . . Assistant District Attorney Ted Mcentire refused prosecution on this case.
. . .
During April and May 2001 . . . Byrd taped telephone calls which she reported to be harassing and included threats made against . . . Byrd at the hands of Cindi Hobson [sic]. Sheriff Fox stated the voice on the tapes matched the voice of the informant from the drug issue described earlier.
Memorandum of Opinion, at 16 (quoting Exhibit A to Affidavit of Steve Nix, attached to Motion of Kenneth Fox and Donald Street for Summary Judgment, filed April 4, 2003) (emphasis added). In other words, Byrd and Raburn made the tapes and accused Nelson of being the voice thereon. The Court finds that Byrd and Diggs should be sanctioned pursuant to Rule 11(b)(3) for filing and advocating these claims as to which there is no admissible evidentiary support.
7. The undersigned will direct the attorney, law firm and Plaintiff to show cause why they have not violated Rule 11(b) by . . . alleging in the course of this litigation through pleadings that the Plaintiff was likely to sustain amputation of her leg as a result of the conduct of Defendant Street in view of Plaintiff's statement to her physical therapist that she feared loss of the leg because of uncontrolled diabetes.
During the hearing in connection with Rule 11 sanctions, the Court inquired of Diggs whether he had spoken with the physician who treated Byrd for the injury to her leg following the incident with Defendant Street involving alleged excessive force. Transcript of Rule 11 Hearing, at 40. Diggs responded:
We were going to depose Dr. Flint on the same day that the physical therapist was deposed, but for some reason that had to be cancelled. I had the records that showed that my client had received an injury on July 24 of 2002 while attending her court hearing. That injury, the report says — and, Your Honor, they're in — we've included them in this material that we've handed to you. That report says that she had x-rays done of her knee that showed that she had a cracked patella bone, torn ligaments surrounding it, had swelling and a great deal of pain. It also said that the result — I mean that the main goal of the physical therapy was to, quote, not lose a limb, close quote. That's out of the medical records that were drafted by Dr. Flint and the physical therapist in this case.
Id. (emphasis added). Attached to the deposition transcript of the physical therapist is the order from Dr. Flint dated September 6, 2002, six weeks after the incident, for physical therapy. Below that order is the "Outpatient Initial Evaluation Date" of August 13, 2002, which includes a report prepared, not by Dr. Flint, but by the physical therapist, Anna Stanko. In the report, the therapist provides a description of the injury as "xrays reveal cartilages that are torn, patella is cracked, and soft tissue is torn per patient report." Deposition Exhibit 1, attached to Deposition of Anna Rosarita Stanko, dated December 19, 2002 (emphasis added). Ms. Stanko noted that the "Patient goals" were "To not lose a limb." Id. Again, this is the patient's report to the therapist. The report is signed, not by Dr. Flint, but by Ms. Stanko. Id. The only thing signed by Dr. Flint is the referral to therapy. Id. Nor are there any x-rays included in the report attached to Ms. Stanko's deposition.
In fact, during Ms. Stanko's deposition, she was questioned about this report and acknowledged that she had prepared the report. Stanko Deposition, at 19-20 ("On your 8/13 record, if you'd refer to that please. . . ." "Is it fair to say, then, that what is written on this report is based solely on your conversations with Mrs. Byrd?" "Yes, it is."). And, Diggs even asked to see the report. Id. ("Could I see that, please?").
However, Byrd's medical records from Dr. Flint were produced to the Defendants during discovery. Obviously, Diggs knew or should have known of the contents of these records. The first record is from the emergency room treatment which occurred on July 24, 2002, at "20:53" or 8:53 p.m., in which Byrd reported having "r[u]n into door." Exhibit C, attached to Response of the Defendants to "William Isaac Diggs' Return to Order to Show Cause" and the Submission of Stuart Axelrod, filed July 15, 2003. As her chief complaint, it was noted she reported that she "struck [a] large commercial glass door with right knee, hip and ribs." Id. The radiology report performed on July 24, 2002, shows "[t]he bones about the hip are unremarkable. There is no fracture or dislocation. No periarticular calcifications. Impression: Normal hip. The regional bones and soft tissues [of the right knee] are unremarkable. Impression: Normal exam. There is no evidence of effusion." Id. Contrary to the position advocated throughout this litigation, Byrd never sustained a "cracked patella."
Moreover, Dr. Flint initially saw Byrd on August 9, 2002, and noted, "On 7/24/02 Mrs. Byrd was accosted by a purse snatcher, in her efforts to resist she was pulled into a heavy door where her knees struck the door with full force." Exhibit D, attached to Defendants' Response, supra (emphasis added). His medical records also show that her knee significantly improved with physical therapy. His records do not contain any reference to amputation of the leg.
In the complaint drafted by Diggs, he alleged that
Street forced his knee into the side of Plaintiff's leg causing Plaintiff's knee to buckle and the cartilage and other soft tissues to tear. Plaintiff's knee was permanently damaged and the injury has caused a condition that now may require the amputation of the lower portion of Plaintiff's leg below the injury.
Complaint, at 7 (emphasis added). In Diggs' response, he admits that at the time he drafted the complaint he was not aware that it was Byrd who posited amputation, not the treating medical professionals. Diggs' Return to Order to Show Cause, at 23. Nonetheless, he stated that "[i]t is the treatment for the injury caused by defendant Street that has interjected the possibility of amputation into the equation." Id. He continues to argue that Byrd's patella was cracked. And, he claims that
the first time Plaintiff discussed amputation of her leg was during her consultation with Dr. Flint, not with the physical therapist. Dr. Flint initially treated the Plaintiff for the fractured patella and torn ligaments injury to the knee caused by Street. It was during that conversation that Dr. Flint discussed with the Plaintiff the possible amputation of her leg. . . .
Id., at 23-24. In the face of the actual records of Dr. Flint, obviously unread by Diggs, such statements are outrageous. Not only has Diggs admitted that he failed to conduct an adequate prefiling investigation into the facts of the case, he has never read the medical records which he claims supports his position.
As to Byrd, her statement to her physician is simply one more example of the vast array of the different versions of the events alleged in this lawsuit. Based on her reports to her physician, it appears that she was assaulted by a purse snatcher and determined to use the injury against Street. If such is, indeed, the case, Byrd has perjured herself on numerous occasions during the course of this litigation. At the very least, she has shown herself to be a totally discredible witness and party.
The Court finds that both Byrd and Diggs should be sanctioned pursuant to Rule 11(b)(3) for making and advocating the allegation that Street caused an injury to Byrd's leg which may cause amputation thereof.
8. As to the attorneys and the law firm, initiating and continuing claims of unlawful search when the search had been ordered by a state court judge.
Diggs responded that he never asserted a claim for an illegal search, only an unreasonable seizure. The language used in the complaint could reasonably be read as asserting such a claim. However, the Court will accept Diggs' characterization thereof. 9. As to the attorneys and the law firm, initiating and continuing claims of denial of access to the courts based on the ruling of a state court judge that no one could reenter his courtroom until a search had been completed.
It is noted, however, that in the response, Diggs again claimed that Byrd suffered a fractured patella. Diggs' Return to Order to Show Cause, at 25 ("The undersigned claims that excessive force was used by Street which fractured Plaintiff's patella. . . ."). It is unconscionable for counsel to continue advocating this issue in view of the medical records which establish that Byrd's knee was never fractured. The Court has considered whether to issue an additional order to show cause why Diggs should not be sanctioned further for this conduct. However, Diggs and his client have usurped more than their share of this Court's time and this issue is left for another day and another court to determine.
In response to this issue, Diggs argues (1) that Cynthia and Street prearranged to have Street present in the courtroom and to accuse Byrd of having a gun; (2) all court security "were unfriendly in their treatment" of Byrd; (3) Street tried to search Byrd while she was in the courtroom; (4) Street caused Byrd to have a nose bleed and fractured her knee; (5) Byrd was intimidated; and (6) Byrd was unable to effectively assist in her case. Id., at 28-29.
Attached to Diggs' Return are two copies of a photograph which he claims shows Cynthia in a car, accompanied by a deputy sheriff, sticking her tongue out at Byrd. The Court has reviewed the photographs and finds the images thereon to be of such poor quality that nothing can be gleaned from them, including the identity of the person in the photograph.
Street filed an affidavit in support of his motion for summary judgment in which he averred the following as to the events of July 24, 2002:
I was in a room outside of the courtroom making a telephone call, when I was approached by one of the court clerks, who expressed concern about the plaintiff's behavior in court. I was told that the plaintiff was keeping her hand in her pocketbook at all times, and acting suspiciously. I entered the courtroom and observed this behavior myself for well over an hour. During this entire time, the plaintiff kept a hand in her purse, whether it was under, above, or laying on top of the table in front of her. I observed the plaintiff grow increasingly upset as the hearing progressed. I observed courtroom personnel showing concern about plaintiff's behavior. I was aware that plaintiff had a reputation for carrying a pistol on her person. I decided that, taking all the circumstances into account, I should make the judge aware of my concern.
Affidavit of Donald Street in Support of his Motion for Summary Judgment, filed April 4, 2003, at 2-3. Judge Robert Lewis, who presided over the hearing, testified during his deposition that Byrd was agitated when he ordered the courtroom cleared. Deposition of Robert D. Lewis, dated December 20, 2002, at 17. Byrd told the judge that she had kept her hand in her purse because she had experienced a nose bleed. Id., at 19. Everyone else immediately cleared the courtroom; however, Byrd remained and argued with the bailiff and the judge. Id., at 19-21. After the recess and when court resumed "she was back at her seat." Id., at 30. She remained until the conclusion of the hearing. There were only two security officers in the courtroom and Judge Lewis did not find that to be an excessive number. Id., at 30-31. No one reported to the judge that Byrd had been injured in any manner. Id., 31-39.
There was no evidence presented throughout this litigation that Cynthia and Street "conspired" to have "excessive or unnecessary" court security for this hearing. Diggs claims that "Street attempted to search Plaintiff in the courtroom. Since this was contrary to the judge's instructions, Street was ordered to stop his efforts at that time." Diggs' Return to Order to Show Cause, at 28. Judge Lewis has testified that Byrd did not leave the courtroom, attempted to argue with him and the bailiff, and he told Street to "take it outside," in order to get Byrd out of the courtroom. Lewis Deposition, at 36 ("I said, `Ma'am, I don't want to hear it. Clear the courtroom, Sheriff. Take that — take that outside."). Byrd told the Judge that she had already had a nose bleed. And, contrary to Diggs' argument that no one else had to "endure" such behavior, everyone who returned to the courtroom was searched.
There is no evidentiary support for the claim that Cynthia somehow conspired to have Street on duty at the hearing and made arrangements in advance to have Byrd accused of carrying a gun. Byrd herself admitted at her deposition that she carries a weapon in her car. This accusation is just one more example of how Diggs used an otherwise innocuous incident to create outrageous allegations of a county-wide conspiracy. Kunstler, 914 F.2d at 515 ("Appellants protest that these allegations were represented in the complaint only as beliefs of their clients, but this does not make them relevant to the complaint or less scandalous in nature."). As a result, Diggs should be sanctioned for filing and pursuing this claim without evidentiary support.
10. As to the attorneys and the law firm, initiating and continuing claims of conspiracy without any evidence beyond conjecture and speculation.
11. As to the Plaintiff, making allegations relating to claims of conspiracy without evidentiary or other support.
As with most of the issues raised, Diggs claims that he could not prove this claim because the undersigned disqualified him and he was unable to educate substitute counsel as to the facts of the case. Among the facts which would have supported a conspiracy, Diggs cites the deposition testimony of Byrd, Beam, Lewis, Buchanan and Fox, as well as the affidavit of Ruby Bennett. The Court has already addressed the allegations made by Byrd, Beam and Lewis in their deposition testimony, finding them uncredible, speculative, and based on hearsay.
According to Diggs, Ruby Bennett's affidavit, alleging that in October 2001 she heard the taped telephone call from Nelson to Byrd, proves the existence of a conspiracy between Nelson and Cynthia to have Byrd killed for $10,000. Diggs' Return to Order to Show Cause, at 32. On October 18, 2001, Bennett provided an affidavit which was filed in the state court alienation of affections action. Exhibit H, attached to Defendants' Response, supra. No where in this affidavit does Bennett make any reference to having just heard this tape or to any of the allegations made therein. Id. Byrd provided an affidavit on the same date; yet, there is nothing in that affidavit referencing the tape or the allegations therein. Exhibit G, attached to id.
Byrd also claims that Nathan made a new will leaving substantial property to Cynthia. Diggs' Return to Order to Show Cause, at 33. Like the illusive photographs and video tapes of Cynthia and Nathan engaging in sexual relations, neither Byrd nor Diggs was ever able to produce the actual document, although repeatedly demanded during discovery.
During the Rule 11 hearing, Byrd produced a compact disc (CD) purportedly recorded from the tape recorded telephone conversation during which Nelson admitted to Byrd that Cynthia had hired him to kill her. The Court has reviewed the C.D. and has concluded that it shows Byrd did in fact "stage" the telephone call. The tone of her voice, the questions she asked, the comments made by "Nelson," and the scope of topics discussed all show an obviously prearranged call designed to cover each allegation of the complaint. The C.D. is mentioned at this point only to show that Byrd and Diggs did not have evidentiary support for the conspiracy claims. Its existence, and the possibility of the fabrication of evidence, will be discussed later in this opinion.
The Court finds that both Byrd and Diggs should be sanctioned pursuant to Rule 11(b)(3).
12. As to the Plaintiff, making allegations that Defendants Jack and Barbara Hopson "watched the store" while Defendant Cynthia Hopson was engaged in sexual relations with the Plaintiff's husband.
Diggs responded to this issue in his response to the previous issue. For the same reasons that the Court rejected his arguments there, it finds that Byrd did not have any evidentiary support for these allegations.
13. As to the Plaintiff, her attorneys, and their law firm, the presentation and continuation of pleadings with the intention to harass the Defendant Cynthia Hopson, to cause her unnecessary delay and the needless increase in the cost of litigation.
Diggs' sole response is that he has not engaged in any such conduct. The Court finds, however, for the same reasons as stated previously, that Byrd was engaged in a personal vendetta against Cynthia and had no qualms about involving the federal court system and other individuals in that vendetta. Any attorney who conducted a reasonable, objective investigation into her outlandish accusations would have surmised her true intention.
Thus, counsel cannot simply rely on a client's patently incredible testimony when any reasonable investigation of the factual bases for the client's claims or examination of materials obtained in discovery would reveal the paucity and implausibility of the evidence.
. . .
The picture th[is] court paints is a vivid one. The court makes clear that this is a case in which [Byrd] leveled widespread charges of [conspiracy] without any regard for the truth of [her] allegations, [pursued] frivolous claims . . . [causing the Defendants to] spen[d] significant amounts of time and money preparing to rebut them, and perjured [herself], all in order to harass and embarrass [Cynthia and the Sheriff's Department]; and, further, that this is a case in which counsel failed to perform [his] responsibilities of investigating the foundation for [his] client[']s claims, failed to examine much of the material turned over to [him] in discovery, and simply pressed forward with [his] case heedless of whether the claims they were pursuing were legitimate ones.
Blue v. U.S. Dep't of Army, 914 F.2d 525, 543-44 (4th Cir. 1990).
III. SANCTIONS IMPOSED PURSUANT TO THE COURT'S INHERENT AUTHORITY
The sanctions imposed pursuant to Rule 11 relate only to signed pleadings filed by Byrd and Diggs and their advocacy of the positions contained therein. However, "[a] federal court also possesses the inherent power to regulate litigants' behavior and to sanction a litigant for bad-faith conduct." In re Weiss, 111 F.3d at 1171. Moreover, "[a] court may invoke its inherent power in conjunction with, or instead of, other sanctioning provisions such as Rule [11]." Id.
"A finding of bad faith is warranted where an attorney [or a client] knowingly or recklessly raises a frivolous argument, or argues a meritorious claim for the purpose of harassing an opponent. A party also demonstrates bad faith by delaying or disrupting the litigation or hampering enforcement of a court order." . . . [A] finding of bad faith is "the key to unlocking the inherent power[.]"
Byrne, 261 F.3d at 1121 (quoting Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998)) (other citations omitted).
The Court will first consider the representations in this action that photographs and videotapes were made of Cynthia and Nathan Byrd having sex but had been destroyed. As previously noted, the state court judge held Byrd in contempt of court because, although she had told Cynthia that such evidence existed, there had never been such evidence and her allegations were made "to worry" Cynthia. However, in this action, the existence of this evidence was used by both Diggs and Byrd to support the allegations of the complaint. Diggs claims that he "has never alleged that photographs and a video tape existed nor has [he] intended to rely upon such evidence." Diggs' Return to Order to Show Cause, at 1. This allegation is contrary to pleadings filed in discovery which were signed by Diggs. Diggs made the following responses to a request for the production of documents submitted on behalf of Cynthia in this action:
20. Provide copies of all photographs and video tapes showing images of the Defendant Cynthia Hopson, the interior of the apartment where the Defendant Cynthia Hopson resides or images of the exterior of the apartment where the Defendant Cynthia Hopson resides that are in the possession of the Plaintiff, Plaintiff[']s counsel or anyone under the control of the Plaintiff or Plaintiff[']s counsel.
Response: Plaintiff is in posesion (sic) of no such items.
. . .
22. Provide all photographs and videotapes exhibited by the Plaintiff to Ms. Debbie Campbell, a/k/a Deborah Lewis, on or about April 2d 2001.
Response: Upon information and belief these materials were destroyed soon after the plaintiff received them.
Plaintiff's Response to Cynthia Hopson's Request for Production, signed by Diggs on February 12, 2003, attached to Plaintiff's Response to Defendants' Motion for Protective Order, filed March 20, 2003 and again on May 8, 2003.
The Court struck the first filing from the record; however, the response was filed again on May 8, 2003, by Danielson.
Diggs also attempts to explain the inconsistent positions by claiming that because Judge Helms' dismissal of the state court action was a sanction for discovery violations, the dismissal was not on the merits and, therefore, issue preclusion does not apply. This Court, however, makes no effort to apply res judicata or issue preclusion. The issue is not whether the dismissal of that action constitutes issue preclusion. The issue is whether Byrd, who told a state court judge that the evidence never existed, can be sanctioned for alleging in this action that the evidence had been in existence, had been viewed by Debbie Campbell who could testify to its contents, and had been destroyed by Byrd. The fact that Byrd admitted in state court that the evidence did not exist is merely additional proof that her conduct, and that of her attorneys, in this action was designed to harass the Defendants, was conducted in bad faith, vexatiously, wantonly, and for oppressive reasons. Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991); Bob McLemore Co., Inc. v. Branch Banking Trust Co., 54 F. Supp.2d 554, 559 (W.D.N.C. 1999), aff'd, 205 F.3d 1334 (4th Cir. 2000) ("These arguments miss the point: it is the filing of this action for which sanctions are to be imposed. The Court reviews the previous filings only as means of ascertaining whether the attorneys were on notice, or should have been, that this action was not well grounded in fact or law."); John Akridge Co., 944 F. Supp. at 34 ("In this case, there is no question that the Plaintiffs filed the instant suit with the specific intent of circumventing this Court's dismissal of its earlier suit.").
The Court does not sanction Byrd or Diggs pursuant to Rule 11 for representations made during discovery. Christian, 286 F.3d at 1121 ("Rule 11 sanctions are limited to misconduct regarding signed pleadings, motions, and other filings."); Rule 11(d).
Diggs claims he had nothing to do with the fact that information about these videos came out during Byrd's deposition, blaming defense counsel for asking questions about their existence. However, Byrd brought up this issue herself during her deposition:
Q. Do you have any personal knowledge, not what you've been told by anybody including your husband, but do you have any personal knowledge that your husband had sex with Cindy Hopson?
A. Did I catch them in bed?
Q. Yes, ma'am.
A. No, I did not. But I saw pictures, plenty of them, that she — and there's no doubt in my mind about that — that she put in my mailbox and a videotape that was put in my mailbox.
Byrd Deposition, at 16. Byrd also described in detail what she saw in the pictures and on the videotape, noting they had been taken in Cynthia's apartment. Id., at 17-19. When asked where the pictures and the videotape were, Byrd replied "In the garbage." Id., at 20. But conveniently, they were not thrown away before Debbie Campbell Lewis and Byrd's private investigator saw them. Id., at 21-22. These items were thrown away in February or March of 2001. Id., at 22-23.
On March 20, 2003, Diggs filed Plaintiff's Response to Defendants' Motion for Protective Order in which he stated:
The verification mentioned by the defendants which relates to the state court discovery responses was prepared by Lloyd Hise, Esquire, of Spruce Pine, N.C. This verification is annexed to a response which was typed in Mr. Hise's office which indicates the materials [the pictures and video tapes] never existed. Plaintiff testified in her deposition that the materials had existed and that she destroyed the photographs and the video tape discussed in this paragraph. This is consistent with the deposition testimony of witness Debra Lewis, which (sic) stated that she had seen the photographs and the videotape. If plaintiff's former counsel indicated in a prior discovery response that the materials "never existed" this was an erroneous response which was likely caused by a lack of communication between counsel and his client who was not physically well at that time.
Plaintiff's Response to Defendants' Motion for Protective Order, filed March 20, 2003 and again on May 8, 2003, at 6. This statement ignores the courtroom colloquy conducted by Judge Helms and referenced above.
In addition to the statement made in the response to the motion for a protective order, Diggs also attached "Plaintiff's Disclosures pursuant to F.R.C.P. 26" in which he noted that Deborah Lewis was an individual who had knowledge about the allegations of the complaint. Plaintiff's Disclosures pursuant to F.R.C.P. 26, attached to id. Indeed, Lewis was deposed and questioned about the tapes and photographs. Campbell Deposition, at 123-26, 174. The alleged existence of this evidence, its destruction, and its viewing by Lewis was clearly designed to continue "to worry" Cynthia. Diggs continued to represent during the course of this litigation and through signed discovery responses which he filed with this Court that such evidence had, in fact, at one time existed. Sabella v. Integrity Fishing Corp., 142 F.R.D. 260, 264 (D.Mass. 1992) ("A review of the file in the Tarrantino case would most likely have shown the true facts. Either Mr. Thompson failed to review the file or conducted an insufficient review. In either case, reasonable inquiry was lacking.").
Inconceivably, Diggs continues to assert that "[t]he undersigned has never alleged that photographs and a video tape existed nor has the undersigned intended to rely up on such evidence." Diggs' Return to Order to Show Cause, supra. "[T]he undersigned was removed from the case before Plaintiff's discovery responses referenced video tapes or photographs of Ms. Hopson's affair with Mr. Byrd." Id., at 2. "Neither is counsel aware that he has alleged in any written discovery responses that such evidence presently exists." Id., at 2-3. These statements are blatantly contradictory to the Response signed by Diggs on February 12, 2003, and filed with the Court on March 20, 2003.
The Court finds that both Diggs and Byrd have acted in bad faith by representing during the course of this litigation that evidence existed which would prove sexual contact between Cynthia and Nathan Byrd. Blue, 914 F.2d at 540 ("Plaintiff Harris' strongest contention of discrimination was her own testimony at the sanctions hearing that she knew herself to be a victim of discrimination because a note she allegedly saw (but never produced) indicated that another applicant for a job for which she was applying had improperly been preselected for the job."). The existence of that relationship is at the heart of the complaint; and, if Byrd could not prove it, none the remaining allegations could stand. The Court further concludes that Byrd perjured herself by testifying that such evidence had existed and had been destroyed by her. Id., at 543 ("While an appellate court is unable to observe testimony first-hand and `taste the flavor of the litigation' in the same manner as a district court, our review of the record does not persuade us that the district court's findings of perjury were ill founded." (Citations omitted)).
In addition, Diggs made outrageous allegations in the course of responses to discovery which were unsubstantiated, frequently irrelevant to this action, and clearly designed to harass, embarrass, and intimidate. Moreover, he filed those responses in this Court. Among the representations made by Diggs are the following:
Frankie Tollie [would have information about] Prescriptive medications not being accounted for in the Mitchell County Jail. Kenneth Fox offering special privileges for silence. Kenneth Fox not processing legitimate grievance filed by witness concerning lost medications.
Plaintiff's Disclosures Pursuant to F.R.C.P. 26, supra, at 3.
Brandi Grindstaff [would have information about] a) Prescriptive medications belonging to her brother, Joey Grindstaff, were not accounted for at the time of brother's death. b) She was arrested by Sheriff's department in an effort to intimidate her as a witness.
Id., at 4.
Anna Stanko [would have information about] Performed physical therapy on Plaintiff's knee in an effort to prevent amputation of limb following injury inflicted by Detective Street.
Brandon Buchanan [would have information about] discussions with [Byrd] about brother's purchase of drugs from Cindy Hopson. David Buchanan [would have information about] Purchased drugs and liquor from Cindy Hopson minutes before his July, 2002, auto accident.
Id., at 6-7.
Jessica Hughes (age 14) [would have information about] Her father, Kevin Hughes, used her as a conduit to purchase drugs from Cindy Hopson.
. . .
Deborah Lewis [would have information about] . . . b)Sheriff's effort to intimidate her since the time when she saved the life of Patrick Mays on the night of the Mitchell County Jail fire; c) Run off the road by a vehicle closely resembling a rare vehicle owned by the Mitchell County Sheriff's office; left for dead on the highway while in a coma[.]
Id., at 8.
Anthony Raburn [would have information about] a) Used by Sheriff Fox with a wire to make a controlled buy of drugs from Cindy Hopson and did so without any follow up by Fox.
Id., at 9.
Records Custodian [Division of Social Services in Bakersville, NC] [would have information about] Child abuse committed by Kevin Hughes following his use of drugs purchased from Cindy Hopson; search of Hughes' home and discovery of drugs in child's bedroom.
Id., at 10.
Plaintiff's damages continue to accrue. However, to date monetary amounts are included where liquidated
. . .
F. In home assistance $10,000.
Id., at 11.
The fire at the jail in Mitchell County had absolutely nothing to do with this action. Allegations that the Sheriff's Department was "skimming" drugs from inmates, that Lewis was being "persecuted" for saving the life of one of those inmates after the fire, and that the prescription medications of one of the deceased inmates were not appropriately accounted for are absolutely irrelevant to any claim involved in this suit. Moreover, as noted above, Brandon Buchanan testified that his brother never purchased drugs from Cynthia; and that after his accident, tests performed at the hospital showed he had neither drugs nor alcohol in his system. And, David Buchanan has signed an affidavit in which he swears under oath that "I have never purchased drugs, alcohol or liquor from Hopson's Store." Affidavit of David Buchanan, dated January 10, 2003, filed March 25, 2003. There is absolutely no evidence that Hughes used his daughter as a "conduit" for the purchase of drugs or that Raburn wore a wire during a controlled buy from Cynthia. And, Diggs apparently never reviewed Dr. Flint's medical records because he continued to assert that amputation was a possible result of the alleged injury. Finally, there has been no evidence that Byrd had to pay for medical or other "in home" assistance after the purported injury, much less to the sum of $10,000. "The laundry list of [Diggs'] outlandish conduct is a long one and raises serious questions as to his respect for the judicial process."
Christian, 286 F.3d at 1131.
Defendant[s] . . . produced an enormous amount of discovery — much of it clearly unrebutted by any credible evidence in plaintiff[']s possession. . . . Counsel, certainly by this time . . . had no reasonable basis upon which to rely on . . . plaintiff. Significant gaps and inconsistencies existed in [the witnesses'] respective versions of events mandating that counsel question their perception of [the events]. When conspiracy theories abound and every [allegation] . . . is questioned on a [conspiracy] basis, counsel have an obligation to inquire behind their client's claims. Here, access to investigate plaintiff[']s stories was virtually unchecked. Yet, [Byrd's] claims were filed, and . . . continued, apparently without any objective thought as to their merit.
Blue, 914 F.2d at 542 (quoting 679 F. Supp. 1204, 1387 (E.D.N.C. 1987) (Fox, J.)).
Any reasonably objective attorney would have been loathe to believe the outrageous allegations being made, much less to include them in responses.
This pattern of heavy-handed litigation shows what became obvious to counsel for Defendant Nelson early in the case. Within days of service of the complaint on Nelson, his attorney, Frank Goldsmith, advised Diggs that the statute of limitations had run as to the only claims alleged against Nelson and asked that the action be dismissed in lieu of Rule 11 sanctions. In response to that letter, Diggs replied, "We make this offer to you. We will drop Mr. Nelson from this suit if he agrees to co-operate with the Plaintiff, to be deposed without invoking the Fifth Amendment, to testify truthfully and completely, and to testify on behalf of the Plaintiff at trial if requested to do so." Exhibit D, attached to Affidavit of C. Frank Goldsmith, Jr., in Support of Motion for Sanctions, filed June 17, 2003 (emphasis added). The clear implication of the letter is that Diggs was enlisting Nelson to participate in Byrd's vendetta. Nor could Nelson "co-operate" if he had nothing to do with the allegations, absent the fabrication of evidence. Goldsmith responded to Diggs' "offer" by explaining that even if Diggs dismissed the complaint as to Nelson without prejudice, Diggs could still subpoena him to testify under oath. Exhibit E, attached to id. "I cannot advise him to `cooperate' in any other sense with the plaintiff or to testify `on behalf of' the plaintiff; he will tell the truth regardless of whom helps or hurts." Id.
In that same letter, Diggs wrote:
[M]ultiple witnesses will testify that your client has made statements admitting to attempting to kill my client; acknowledging that Cindy Hopson paid him to carry out the attempt; indicating that he thought, after checking for a pulse that she was dead; acknowledging that he intends to try to kill her again; and that subsequent to the beating, he has stalked her on her property and peered inside a window at her home at night to see my client disrobe and ready herself for bed, all of this within calendar year 2002.
Exhibit D, supra. On December 3, 2002, after receiving Plaintiff's Rule 26 disclosures, Goldsmith wrote again to Diggs advising that "I find nothing in your Rule 26 disclosures that reveals the existence of any such witnesses." Exhibit F, attached to Goldsmith Affidavit. Goldsmith has averred that Diggs never responded to this letter and no such identifications were ever made.
[A]lthough [Diggs'] conduct [may] not conclusively violate the Code of Professional Responsibility . . . [his] actions [certainly were] conduct unbecoming an officer of the Court. . . . [Diggs'] communication with various counsel for Defendants [is] unprofessional, scurrilous, and distasteful conduct. . . . He communicated with defense counsel in a cavalier and "half-cocked" manner in an effort to bully the Defendants into a quick and favorable settlement.
Byrne, 261 F.3d at 1088 (internal quotations and citations omitted).
Nor is such boorish conduct limited to Diggs. During the deposition of Defendant Nelson, which Byrd did not attend thereby precluding a positive identification of him as her attacker, substitute counsel Chris Danielsen asked Nelson "whether [he] had ever had sex with Cindy Hopson, whether she had ever given [him] a `blow job' (to use counsel's language), and even whether [he] would like for her to give [him] a `blow job.'" Affidavit of Holger Nelson, filed Jun 17, 2003, at 3. This question had nothing to do with the evidence in the case; Cynthia was alleged to have had an affair with Nathan Byrd, not Nelson. Obviously, the question was asked in order to embarrass and humiliate Nelson, whose wife also attended the deposition. During Cynthia's deposition on May 1, 2003, substitute counsel Stuart Axelrod asked the following questions:
Q. Do you ever do drugs with Sheriff Fox?
A. No sir.
Q. Do you know of Sheriff Fox ever doing drugs?
A. No sir.
Q. Do you ever do any drugs with Donald Street?
A. No sir.
Q. Do you know of Donald Street ever doing drugs?
A. No sir.
Q. Do you ever do any drugs with Mr. Howell [Cynthia's attorney]?
A. No sir.
Mr. Howell: I resent that.
Mr. Axelrod: I'm just asking a question.
Mr. Howell: You go ahead and you answer.
Witness: I said, no sir.
Mr. Howell: We're going to show that to the Court.
Mr. Axelrod: You go right ahead.
Mr. Howell: I assure you I will.
Mr. Axelrod: You can go right ahead.
Memorandum of Law of Defendant Cynthia Hopson in support of her Motion for Sanctions, Costs and Attorney Fees, filed June 6, 2003, at 2. When questioned about this behavior during the show cause hearing, Diggs admitted that this line of questioning had absolutely nothing to do with the case. Transcript of Rule 11 Hearing, at 48. Axelrod's excuse for asking the question was that Danielson had told him that "Mr. Howell might quite possibly indulge in drugs with clients." Id., at 61.
Neither Danielsen nor Axelrod has denied an intention to embarrass by these questions. Whitehead v. Food Max of Mississippi, Inc., 332 F.3d 796, 807 (5th Cir. 2003). Based on the facts in the record of this case, embarrassment is the equivalent of harassment. Id. "[C]ounsel's reckless and knowing conduct in this case was tantamount to bad faith and therefore sanctionable under the court's inherent power." B.K.B. v. Maui Police Dep't, 276 F.3d 1091, 1108 (9th Cir. 2002). Sanctions may be imposed for embarrassment pursuant to that inherent power. Id., at 1109. Moreover, all three of Plaintiff's counsel have engaged in outrageous behavior toward opposing counsel as well as the Defendants. Comuso v. Nat'l R.R. Passenger Corp., 267 F.3d 331, 333, 339 (3rd Cir. 2001). "Such comments cross the line from passionate advocacy and disagreement with [opposing counsel] into sanctionable conduct evincing bad faith. . . . Thus, bad faith here may be inferred from the clear lack of merit of the claims . . . and the numerous attempts to impugn the integrity of a . . . fellow attorney through totally unsubstantiated abusive and slanderous statements." In re 60 East 80th Street Equities, Inc., 218 F.3d 109, 117 (2d Cir. 2000).
At the Rule 11 hearing, Axelrod submitted into evidence, over Defendants' objections, a C.D. which he claims was made from a recording of a telephone call between Byrd and Nelson. Plaintiff's Exhibit 1. The Court has listened to the C.D. and finds it is obviously a staged telephone call between Byrd and a man. Although during the call the man continuously threatens Byrd, telling her that he is going to kill her and calling her profane names, she begs him to stay on the line while she asks him a series of questions designed to elicit evidence to support her allegations in this case. Among the questions are: (1) who hired you to kill me; (2) how often have you stalked me; (3) how many times have you called me and made harassing calls; (4) how much money were you paid; (5) who paid you to kill me; (6) you would kill me for $10,000; (7) did Nathan know Cynthia hired you to kill me; (8) did Cynthia take you to the place where you beat me up; (9) did Cynthia pick you up after you left me for dead; and (10) how many times have you been at Cynthia's apartment. During the approximately 15 minute call, Byrd manages to throw into the conversation that she never planted cocaine in Cynthia's truck and that this man has called to harass her at least 6 to 7 times. The man, obviously coached in what topics he should cover, manages to accuse Cynthia of drug trafficking, to cast some unidentifiable aspersion against Barbara Hopson, and to claim the sheriff is "on the take." He claims to have watched Cynthia and Nathan having sex and suggests that Nathan gave Cynthia the $10,000 fee to have Byrd killed. And, all through the call, the man persistently threatens that he is going to kill Byrd.
The manner and tone of the call is sufficient to convince the undersigned that Byrd fabricated the call. In addition, defense counsel have submitted an authenticated tape recording of a telephone call made to Cynthia's telephone by a man who identifies himself as Anthony Raburn. Cassette, attached to Affidavit of Cynthia Hopson, filed July 15, 2003. The Court has listened to that tape; and it is the opinion of the Court that the voice of the man speaking on that tape is the same voice of the man speaking on Byrd's CD. In other words, Byrd and Raburn conspired to produce this recording which she has claimed all through this litigation is the voice of Defendant Nelson.
Moreover, Sheriff Fox has also produced an authenticated recording of the same man's voice recorded during a call to the Sheriff, and who he identifies as Anthony Raburn. Cassette, attached to Affidavit of Sheriff Fox, filed July 15, 2003. During that call, Raburn accuses Cynthia of having cocaine in the back of her truck. On June 26, 2002, Byrd wrote a check to Raburn in the amount of $2,000. Exhibit F, attached to Defendants' Response, supra.
Both Diggs and Axelrod have relied on this recording to support their positions in this case. Axelrod admitted at the Rule 11 hearing that he has listened to the recording "maybe 30 or 40 times[.]" Transcript of Rule 11 Hearing, at 59. Diggs argued that the contents of the tape showed that the allegations of the complaint were not frivolous and thus, sanctions should not be imposed. Id., at 34-35, 38. He also relied on the contents of the tape in numerous discovery disclosures. Exhibit N, Plaintiff's Responses to Requests to Produce by Defendants Fox and Street, signed February 17, 2003, attached to Plaintiff's Response to Defendants' Motion for Protective Order, filed March 20, 2003 and again on May 8, 2003, at 2; Exhibit M, Plaintiff's Answers to Interrogatories Propounded by Jack and Barbara Hopson, signed February 17, 2003, attached to Plaintiff's Response, at 3, 10; Exhibit L, Plaintiff's Response to Cynthia Hopson's Request for Production, signed February 12, 2003, attached to Plaintiff's Response, ¶ 21; Exhibit K, Plaintiff's Answers to Interrogatories Propounded by Defendant Cynthia Hopson, signed February 12, 2003, attached to Plaintiff's Response, at 5; Exhibit J, Plaintiff's Answers to Request for Production by Defendant Nelson, signed January 8, 2003, attached to Plaintiff's Response, at 3; Exhibit I, Plaintiff's Answers to Interrogatories Propounded by Defendant Nelson, signed January 8, 2003, attached to Plaintiff's Response, at 2, 5-8; Exhibit C, Plaintiff's Disclosures Pursuant to F.R.C.P. 26, signed November 29, 2003, attached to Plaintiff's Response, at 11. It is inconceivable to the Court that Diggs would have relied on this recording without ever having listened to it.
In addition to the fact that Byrd and Raburn obviously knew each other, after all Byrd on at least one occasion paid him the sum of $2,000, Diggs also knew Raburn because he had previously represented Raburn. Exhibit E, attached to Defendants' Response. On January 8, 2002, Blue Ridge Savings Bank sued Diggs and Raburn to set aside a deed given to Diggs by Raburn for four parcels of real estate in Yancey County, North Carolina. Id. Blue Ridge claimed that the deed, which was recorded on September 17, 2001, was a fraudulent conveyance in order to avoid the deficiency liens which Blue Ridge had against Raburn. Id. In response to that complaint, Diggs answered that "he made no effort to defraud [Blue Ridge] anywise, but rather took title to the property . . . as a legal fee as payment for services rendered to Defendant Anthony L. Raburn. . . ." Id. Nor can it go unnoticed that Byrd and Ruby Bennett claim that the first time Byrd played this recording for Ruby, who has sworn under penalty of perjury that the voice is that of Nelson, was in October 2001, not long after the real estate was deeded to Diggs.
In Nelson's affidavit filed in support of his motion for sanctions, he avers that
[a]fter I was served with the suit papers, but before I had hired Mr. Goldsmith, Mr. Diggs called me on my work cellphone to talk to me about the case. I do not know how he had obtained the number, but I assumed he must have gotten it from the Penland School [where Nelson works]. I told him then that I had nothing to do with assaulting Ms. Byrd and did not know anything about that event. I also told him that I was at work on the day Ms. Byrd said the assault happened, and that I had time records to prove it. We later produced those time records for Mr. Diggs. He proceeded with the case against me anyway.
Nelson Affidavit, supra, at 4. Based on this contact between Diggs and Nelson, it would appear that Diggs has heard both the voice of Raburn and that of Nelson.
In the event that Diggs should claim he has never heard the recording which he argued contains Nelson's voice, it is noted that in Danielson's sealed affidavit, he averred that Diggs played the tape for Danielson.
Finally, in support of the motion for sanctions, Cynthia's attorney, Dennis Howell, attached to his affidavit a copy of the Residential Property Record Card for lots 5, 27, 28 and 32 of Sugar Loaf Mountain Estates, Yancey County, North Carolina. Exhibit E, attached to Affidavit of Dennis L. Howell, filed June 23, 2003. Diggs made no reference to this land in his financial statement provided to the Court and has not mentioned it either at the hearing or in his response to the Order to Show Cause. Mr. Howell has also filed a copy of the Representation Agreement between Raburn and Diggs, dated October 5, 2001, which provides that Raburn "agree[s] to compensate my attorney with a modified contingency arrangement. Initially, Lots 5, 27, 28, and 32 in Ramseytown Township, Yancey County, North Carolina further being located in the development known as Sugar Loaf Mountain Estates,. . . ." Exhibit E, attached to Defendants' Response.
Although Diggs identified real estate as an asset, he did not identify the location thereof. Based on the value reported by Diggs of the unidentified real estate, it does not appear that it could be the same property.
Fabrication of evidence is clearly an abusive litigation practice which, if proven, warrants a bevy of sanctions. Oliver v. Gramley, 200 F.3d 465, 466 (7th Cir. 1999); Gonzalez v. Trinity Marine Group, Inc., 117 F.3d 894, 898-99 (5th Cir. 1997). However, the undersigned cannot conclusively determine that the C.D. is fabricated evidence on the present record, although every sign points in that direction. As a result, the attorneys and Byrd will not be sanctioned, at this time, for the fabrication of evidence; and this opinion should not be read as relying on fabrication as a reason for the sanctions imposed. The C.D. and the two cassette tapes provided by the Defendants will be turned over to the United States Attorney who will be requested to investigate this matter.
There is, however, no shortage of fodder for sanctions pursuant to the Court's inherent powers; and for the reasons stated above, Byrd, Diggs, Axelrod and Danielson, each of whom the Court finds has acted in bad faith, will be sanctioned pursuant to the Court's inherent powers. In re Weiss, 111 F.3d at 1172-73 ("Much of McGahren's conduct involved deceptions, half-truths, and misrepresentations presented to the . . . court itself. [H]is entire course of conduct throughout the [proceedings] evidenced bad faith and an attempt to perpetrate a fraud on the court, the conduct sanctionable under . . . Rule [11] was intertwined within conduct that only the inherent power could address. . . . Bad faith was inferable from the overall behavior of the McGahrens throughout the procedure."); Byrne, 261 F.3d at 1132 ("[T]he plaintiff and her lawyers `abused the judicial process' when they invoked the court's jurisdiction for the purposes of extorting a settlement from the defendants and, in the process, ruining the [Defendants'] professional reputations.").
IV. SANCTIONS PURSUANT TO 28 U.S.C. § 1927
Title 28 U.S.C. § 1927 provides in pertinent part that "[a]ny 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."
The unambiguous text of § 1927 aims only at attorneys who multiply proceedings. It "does not distinguish between winners and losers, or between plaintiffs and defendants. The statute is indifferent to the equities of a dispute and to the values advanced by the substantive law." Rather, this provision "is concerned only with limiting the abuse of court processes." . . . Section 1927 focuses on the conduct of the litigation and not on its merits.
DeBauche v. Trani, 191 F.3d 499, 511 (4th Cir. 1999) (quoting Roadway Express, Inc. v. Piper, 447 U.S. 752, 762 (1980)). Additionally, § 1927 requires a finding of bad faith as a precondition to the imposition of sanctions. Chaudhry v. Gallerizzo, 174 F.3d 394, 410 n. 14 (4th Cir. 1999).
In the Rule 26 disclosures filed by Diggs, he identified 34 individuals as having discoverable information regarding the allegations of the complaint. Exhibit C, Plaintiff's Disclosures pursuant to F.R.C.P. 26, attached to Plaintiff's Response to Defendants' Motion for Protective Order. Almost all of the information allegedly known by these individuals was hearsay, rumor, or speculation. However, because they were identified, the Defendants were obligated to depose many of them. Indeed, the undersigned has rarely seen a file which contains so many deposition transcripts.
Nor did Diggs hesitate to file multiple affidavits from the same individuals, usually because the initial ones failed to establish the contentions claimed. Another example of Diggs' intractable litigation habits is seen from his reaction to being disqualified as counsel for Byrd. The Order disqualifying Diggs was entered on March 7, 2003. On March 12, 2003, the undersigned responded to a letter from Diggs concerning the scope of his disqualification. In that letter, which has been made part of the record, the undersigned wrote,
"you and your son are disqualified from acting as counsel for the Plaintiff in this matter as of the date of entry of my Order. . . . Neither of you may act as counsel for the Plaintiff during the remainder of the discovery process or for any other purpose." Undeterred, Diggs filed a response to a motion for a protective order on March 20, 2003. That pleading shall be stricken from the record. Counsel is advised that any future conduct in violation of this Court's Orders may subject him to sanctions pursuant to Federal Rule of Civil Procedure 11, 28 U.S.C. § 1927, the Court's inherent powers, and/or civil contempt.
Order, filed March 31, 2003 (quoting Letter from the Court, filed March 12, 2003 (emphasis in original)). On May 8, 2003, Danielson filed the same response a second time. However, because only the time of the Court was involved in this particular incident, sanctions pursuant to § 1927 will not be imposed. Blue, 914 F.2d at 548.
V. SCOPE AND FORM OF SANCTIONS
In considering the nature of sanctions to be imposed for the violations of Rule 11, the Court looks first to the language thereof.
A sanction imposed for violation of this rule shall be limited to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated. . . . [T]he sanction may consist of, or include, directives of a nonmonetary nature, an order to pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of some or all of the reasonable attorneys' fees and other expenses incurred as a direct result of the violation.
The "primary, or `first' purpose of Rule 11 is to deter future litigation abuse." Kunstler, 914 F.2d at 522. When a monetary award is considered, the Court should consider "(1) the reasonableness of the opposing party's attorney's fees; (2) the minimum to deter; (3) the ability to pay; and (4) factors related to the severity of the Rule 11 violation." Id., at 523. And, as the Rule states, a sanction of attorneys' fees must be limited to those incurred in this action.
The Court will apply the same standards to the assessment of attorneys' fees pursuant to its inherent powers. As to the assessment pursuant to § 1927, fees will be limited to the conduct found to be multiplicitous. The Defendants also moved for an award of attorneys' fees pursuant to 42 U.S.C. § 1988. That statute and the standards applicable to it are discussed below.
In addition to seeking awards of attorneys' fees, defense counsel also moved for costs and litigation expenses pursuant to Rule 11, this Court's inherent power, § 1927, Federal Rule of Civil Procedure 54 (Rule 54) and 42 U.S.C. § 1988. Rule 54 provides that costs "shall be allowed as of course to the prevailing party unless the court directs otherwise." F.R.Civ.P. 54(d)(1). 28 U.S.C. § 1920 provides for the taxation of costs which include the fees of the stenographic reporter and transcripts obtained for use in the case; fees for printing and witnesses; fees for exemplification and copies and docketing fees. 42 U.S.C. § 1988 provides for the recovery of reasonable litigation expenses in excess of costs provided such expenses would normally be charged to a fee paying client. Daly v. Hill, 790 F.2d 1071, 1082083 (4th Cir. 1986); accord, Kerns v. Consolidation Coal Co., 247 F.3d 133 (4th Cir. 2001); Trimper v. City of Norfolk, Va., 58 F.3d 68, 75 (4th Cir. 1995).
1. The attorneys' fees and costs of Dennis Howell on behalf of Cynthia Hopson.
The undersigned is familiar with the experience, skill and reputation of Mr. Howell who is one of the finest members of our Bar in the Western District of North Carolina. The Court has also reviewed the affidavit of Attorney Steve Warren, who avers that the services rendered by Mr. Howell and the $140 hourly rate set by him in this matter are reasonable. Affidavit of Steve R. Warren, filed June 23, 2003.
Obviously, every claim in the complaint was asserted against Cynthia and the claims alleged are not necessarily familiar to the average civil practitioner, e.g., civil RICO and conspiracy to deprive civil rights claims. The Court has reviewed Mr. Howell's time records and finds that he has provided reasonable, yet efficient services to his client. Kunstler, 914 F.2d at 523 ("The injured party has a duty to mitigate costs by not overstaffing, overresearching or overdiscovering clearly meritless claims."). Although the allegations raised were frivolous, the sheer volume and scope of allegations, and the numbers of people alleged to be involved, required extensive work and sorting out. Moreover, the volume of discovery required to test the knowledge of the 34 individuals identified by Diggs was extensive and time consuming. Moreover, that portion of Mr. Howell's time spent in connection with the Rule 11 sanctions will also be allowed as attorneys' fees. Fed.R.Civ.P. 11(c)(1)(A) ("If warranted, the court may award to the party prevailing on the motion the reasonable expenses and attorney's fees incurred in presenting or opposing the motion.").
Mr. Howell expended a total of 515.3 hours in connection with this case. Exhibit B, attached to Affidavit of Dennis L. Howell, filed June 23, 2203, at 9. Applying his hourly rate of $140, he is entitled to be paid $72,142.00 in attorneys' fees. Of those hours, 213.5 hours involved discovery issues, including depositions. Those hours involved a total of $29,890.00 in attorneys' fees.
The Court has broken out the time spent by each attorney in discovery because it has found that Diggs vexatiously multiplied the proceedings by listing so many possible witnesses and such outrageous claims to which those individuals were alleged to have knowledge.
The Court next considers the ability to pay. Based on the financial statements submitted under seal, Byrd clearly has the ability to pay an award of attorneys' fees to Mr. Howell. It does bear mentioning, however, that she appears to have been less than forthcoming in this statement. The total tax value of property found by Mr. Howell during his search of public records exceeds the total fair market value of the property disclosed by Byrd. See, Exhibit C, attached to id. She also lists no accounts receivable although Mr. Howell's research found the same. Howell Affidavit, at 10. In addition to these discrepancies, Bruce Wiederspiel has provided an affidavit in which he averred that in October 2002, he purchased land in Mitchell County from Nathan and Betty Byrd and Mark and Shannon Forbes. Affidavit of Bruce R. Wiederspiel, filed June 23, 2003. Wiederspiel avers that in order to purchase the land, the sellers were adamant that the payment of the purchase price at closing be handled as follows:
On October 1st 2002, the transaction was closed. I handed to Nathan Byrd and Betty Byrd, at the closing, $200,000.00 in cash as was agreed in this transaction. I further handed to Mark Forbes and wife, Shannon Forbes, $200,000.00 in cash. In addition, there were various checks delivered to Nathan Byrd and wife, Betty Byrd, totaling the sum of $200,000.00 and to Mark Forbes and wife, Shannon Forbes, checks totaling the sum of $200,000.00.
Id., at 2. This transaction is also inconsistent with the financial statement provided by Byrd under seal.
Diggs also has the ability to pay a portion of attorneys' fees based on the financial information submitted under seal.
The severity of the Rule 11 violation has been addressed above. In addition, the Court considers the impact of the litigation on Cynthia Hopson. She has averred that
I have read the deposition of Holger Nelson in which he is asked whether or not I "ever gave him a blow job." That question is extremely offensive to me. I barely know Mr. Nelson. Years ago he rode in a group of horseback riders that was riding horses with myself and my daughter. He very seldom comes into our store. There was no reason to ask that question. I was present at my deposition when I was asked by Mr. Axelrod many questions about whether nor not I had ever used a controlled substance and was even asked if I had done so with Mr. Howell. Those questions were extremely embarrassing and very offensive and were without any basis. This litigation has been extremely traumatic for me as it was brought against me without any basis in law or in fact. I never committed any of the acts Ms. Byrd alleges that I committed. Additionally upsetting to me is the cost and expense that my mother and father have had to incur to defend me and themselves in this litigation. My mother and father have used all of their savings to pay my legal fees and to pay their legal fees. My mother and father are now to the point where they have no savings for their retirement. . . . I . . . hope that the Court can find some way to restore to me the reputation that I had before this baseless litigation was filed.
Affidavit of Cynthia Hopson, filed June 23, 2003, ¶¶ 7-8. It also bears noting that
[t]his case is not one of a district court sanctioning attorneys and their clients for forwarding novel legal claims. Rather, it is a case in which a district court imposed sanctions because the parties and counsel pressed on a massive scale insubstantial claims unsupported by any credible evidence. The parties were found . . . to have maintained plainly baseless suits, and to have perjured themselves on the witness stand, all in an effort to harass the defendant[s]. Counsel was found to have shirked its responsibility to explore the factual bases for the clients' suits and to examine the materials obtained in discovery, instead charging forward with the litigation in disregard of its manifest lack of merit. Such conduct cannot be condoned.
Blue, 914 F.2d at 550. As to deterrence, "it is appropriate for the court to consider counsel's . . . experience, the outrageous and scandalous nature of the claims made, and the improper purpose of the lawsuit. A court might also increase a sanction if one [party] has been previously sanctioned, because such conduct might indicate that the previous sanction was not enough to deter the repetition of the offense." Kunstler, 914 F.2d at 525. Byrd clearly set about a course of conduct to destroy Cynthia financially and to harass her as revenge for the purported affair. Diggs, despite his experience, went along with her purpose and indeed, enabled her to carry it out. Both of them have in essence thumbed their noses in the face of judicial and other warnings that their conduct could result in serious consequences. Indeed, at the Rule 11 hearing, the demeanor of both Diggs and Axelrod indicated that they had yet to take seriously the threat of sanctions. Diggs continued to argue legal positions which had no basis in precedent and factual positions which had no basis in reality. His courtroom demeanor was also inappropriate. For example, he turned and talked with his investigator during argument by opposing counsel. He turned around and motioned for Byrd to come and sit at the table with him and then stood up to arrange it. And, it has already been noted that he failed to serve his response on opposing counsel until each of them had completed their argument to the Court. Axelrod, who asked Cynthia about doing drugs with her attorney during a deposition, showed an equal lack of discretion in arguments to the Court. Axelrod argued that he and his co-counsel, Danielson, who is visually impaired, were at a severe disadvantage due to the disqualification of Diggs as counsel. In what can only have been a crude attempt at humor, Axelrod actually stated to the Court that "at one point I thought it was the blind leading the blind, Your Honor." Transcript of Rule 11 Hearing, at 56. The Court finds a substantial sanction is the minimum necessary to deter future misconduct.
The Court finds, pursuant to Rule 11, and its inherent power, that Byrd shall pay attorneys' fees on behalf of Cynthia Hopson to Dennis Howell in the amount of $62,142.00. The Court finds, pursuant to Rule 11, § 1927 and its inherent power, that Diggs shall pay attorneys' fees on behalf of Cynthia Hopson to Dennis Howell in the amount of $10,000.00. This amount is based on Diggs' lesser ability to pay.
As to Axelrod, the Court finds he has limited ability to pay any sanction. Pursuant to the Court's inherent power, Axelrod is ordered to pay the sum of $500 to Dennis Howell as a sanction for his unprofessional conduct in the course of the deposition of Cynthia Hopson. This sum shall be applied against the award of costs made to Cynthia Hopson.
As an alternative ruling, the law firm of Diggs Danielsen L.L.C. is ordered to pay the sum of $500 to Dennis Howell.
The Court finds, pursuant to Rule 54, 28 U.S.C. § 1920, and 42 U.S.C. § 1988, and the Court's inherent power, that Byrd should pay the sum of $2,781.01 in costs and reasonable litigation expenses to Dennis Howell on behalf of Cynthia Hopson.
As will be discussed below, the Court finds Cynthia to have been a prevailing party entitled to an award of reasonable costs and litigation expenses.
2. The attorneys' fees and costs of Frank Goldsmith on behalf of Holger Nelson.
The undersigned is likewise familiar with the experience, skill, and reputation of Mr. Goldsmith who is a preeminent member of the Bar in the Western District of North Carolina. Mr. Goldsmith frequently litigates in federal court and his reputation for veracity and professionalism is well known. The Court has also reviewed the affidavit of Mr. Goldsmith, and finds the hourly rates of $185 and $190 set by him in this matter are reasonable. Affidavit of C. Frank Goldsmith, filed June 17, 2003, at 4.
The Court has also reviewed the time records kept by Mr. Goldsmith and finds that the time expended to represent Nelson is more than reasonable and efficient. Although Nelson was sued only for assault and battery and common law conspiracy, the allegations contained in those counts were intertwined with the allegations as to all the other counts of the complaint. Thus, discovery could not be limited solely to those counts. Mr. Goldsmith was involved in 65.7 hours of discovery out of a total of 125.9 hours spent on the entire case. This reflects his studied efforts to keep Nelson's attorneys' fees as low as possible, as averred to by Mr. Goldsmith. Id., at 5.
The same reasoning as noted above applies as to the severity of the conduct, the ability to pay, and the minimum sanction to deter. The Court finds particularly troubling the letter sent by Diggs to Mr. Goldsmith indicating that if Nelson would "cooperate," Diggs would dismiss Nelson as a defendant. As to the impact on Nelson, he has provided an affidavit in which he avers that at no time has he fit the physical description given of the assailant by Byrd. Affidavit of Holger C. Nelson, filed June 17, 2003. Nelson, who works as a janitor at a local school, averred that
I paid [Mr. Goldsmith] an initial retainer of $500, which I had to borrow from a friend . . . . In fact, I had to sell a truck, a four-wheeler, an old (1899) coin, and a rifle in order to come up with some money to pay the expenses of defending this case.
. . .
I do not know Ms. Byrd personally and as far as I know have never met her, but she has the reputation in Mitchell County of being a wealthy woman who deals in real estate and who has made statements about having substantial assets, from what I have been told. I do not think it is fair that she has made me incur the expense of hiring an attorney to defend myself against claims that were untrue, when she had no evidence at all that would have given her reason to think I was guilty.
. . .
I do not know whether this is something that the Court will consider, but the allegations made against me by Ms. Byrd and her attorneys have had a severe impact on my life in Mitchell County. Mitchell County is generally a friendly place where most people know each other and will throw their hand up as they pass by, or will make a point of stopping to speak to someone they know. Now hardly anyone throws up his hand to greet me, and people turn away from me when I walk into a store or other public place. I can hear remarks such as "Here comes the hit man," or "That's him," and I know they have been talking about me and the allegations Ms. Byrd has made in her law suit. My stepson tells me that some of his friends avoid him in school now or make taunting remarks. My reputation has suffered greatly on account of the things alleged in this complaint, and it is not fair that a person should make such accusations and ruin a man in his own community without any basis whatsoever.
Id., at 2-5.
The Court finds pursuant to Rule 11 and its inherent power that Byrd shall pay to Frank Goldsmith the sum of $13,741.00 as attorneys' fees on behalf of Holger Nelson. The Court finds pursuant to Rule 11, its inherent powers, and § 1927, that Diggs shall pay to Frank Goldsmith the sum of $10,000.00 as attorneys' fees on behalf of Holger Nelson. This is based on Diggs' lesser financial ability to pay.
As to Danielsen, the Court finds he has limited ability to pay any sanction. Pursuant to the Court's inherent power, Danielsen is ordered to pay the sum of $500 to Frank Goldsmith as a sanction for his unprofessional conduct in the course of the deposition of Holger Nelson. This sum shall be applied against the award of costs made to Holger Nelson.
As an alternative ruling, the Court finds the law firm of Diggs Danielsen L.L.C. shall pay the sum of $500 to Frank Goldsmith.
The Court finds, pursuant to Rule 54, 28 U.S.C. § 1920, 42 U.S.C. § 1988, and the Court's inherent authority, that Byrd should pay the sum of $573.50 in costs and reasonable litigation expenses to Frank Goldsmith on behalf of Holger Nelson.
The Court has not been able to ascertain from the record whether Mr. Goldsmith moved for fees and costs pursuant to 42 U.S.C. § 1988. However, at the hearing, the Defendants each adopted the arguments and motions of the other defendants and subsequently filed a joint response to Diggs' Return. The Court therefore presumes that Mr. Goldsmith joined in such a motion. In the event he did not, the award is made pursuant to the other provisions cited.
3. The attorneys' fees and costs on behalf of Jack and Barbara Hopson.
Although this was the first time Mr. Santaniello appeared before the undersigned, the Court has reviewed the affidavit of Scott Jones, an attorney with whom the Court is familiar, and finds that his conclusions regarding the experience and legal abilities of Mr. Santaniello are accurate. Affidavit of W. Scott Jones, filed June 24, 2003. The Court also finds that Mr. Jones' conclusion that an hourly rate of $140.00 is reasonable to be accurate.
The allegations against the Hopsons involved wide-ranging accusations of drugs, gambling, murder for hire, money laundering, and racketeering, all involving a purported conspiracy with the Mitchell County Sheriff's Department which was allegedly "bought off" by the Hopsons. The discovery necessary to defend them was as voluminous as that necessary to defend their daughter. Out of a total of 157.4 hours spent on this case, 71.5 hours were spent in discovery matters. The Court finds the time spent to be reasonable under the circumstances of this case.
The Court finds the expenses and attorneys' fees incurred in connection with the Rule 11 motion are warranted.
As noted above, in considering the severity of the conduct being sanctioned, the Court considers the impact this case had on the Hopsons. Mr. Hopson has provided an affidavit to the Court.
After the state lawsuit was dismissed I had hoped that the litigation was over with. Myself and my wife had used a lot of our personal savings to pay the legal fees that Cynthia had incurred in successfully defending the state case. When I was served with a copy of the complaint in the federal action I read the complaint completely. Not one accusation that was made in that complaint against myself, my wife or my daughter was true. . . . I built a horse rink for my granddaughter because she loves horses and because she likes barrel racing with her horses. I never at any time imagined that my building a horse rink for my granddaughter and the barrel racing could be used against my family in an attempt to drag us into a baseless civil action in federal court. In short, after reading the complaint filed by Mrs. Byrd I was amazed that such false accusations could be made and was further amazed that I would have to spend my savings for my retirement to defend such accusations.
. . .
On February 18th 2003 I contacted Mr. Howell and told him that I needed to meet with him. I went to Mr. Howell's office and I explained to him that myself and my wife had used all of our savings to pay the legal fees in regard to the defense of this case and that we had no more funds. I further explained to him that we had even taken a loan through our credit card to try to pay some of the legal fees but at the present time we simply had no other way to turn to pay for the legal fees for our defense. I explained to Mr. Howell that myself and my wife had land but there was substantial obligations owed upon the land it would be some time before we could pay either Mr. Howell or Mr. Santaniello for their services. My son and daughter-in-law, Jerry and Melissa Hopson, offered that if Mr. Howell and Mr. Santaniello would wait until we could sell some of our assets that Jerry and Melissa would be security for the payment of up to $30,000.00 of the legal fees by granting Mr. Howell and Mr. Santaniello a deed of trust upon a tract of land that Jerry and Melissa own in Mitchell County. Mr. Santaniello and Mr. Howell graciously agreed to defer receiving regular payments and also agreed to the proposal made by my son and his wife.
Affidavit of Jack Hopson, filed June 23, 2003, at 2-3.
Barbara Hopson also provided an affidavit.
I am the owner of a small grocery and convenience store located in the Buladean Community of Mitchell County, North Carolina. . . . For many years I operated the store, however, several years ago I suffered an Acoustic Neuroma, which is a type of brain cancer and can no longer work constantly in the store. Since that time my daughter, Cynthia, has operated the store for me.
. . .
The Complaint that was filed against us by Ms. Byrd is completely baseless. Myself and my husband have never done one thing to harm Ms. Byrd in any way, form, or fashion. The defense of the litigation has taken all of our savings and now we are faced with owing a substantial indebtedness to Mr. Howell and Mr. Santaniello. I am in poor health . . . and am not able to go out and earn money with which to pay the fees. My husband works hard in his grading business but he cannot earn sufficient sums of money to pay the legal fees and to also pay the indebtedness that is owed on our land. . . . My husband and I have always enjoyed what we thought was an excellent reputation in the small Buladean Community, but our reputation has been besmirched by the baseless allegations made by Ms. Byrd. Other than the deaths of one of my sons and of my parents this litigation has been the worst thing that happened to me in my entire life.
Affidavit of Barbara Hopson, filed June 23, 2003, at 1, 3.
The Court reiterates the findings made above concerning the minimum sanction to deter, the ability to pay, and the factors relating to the severity of the Rule 11 violation. The Court finds the sum of $22,036.00 is a reasonable attorneys' fee.
The Court finds pursuant to Rules 11 and 54 and its inherent power that Byrd shall pay to Andrew Santaniello the sums of $12,172.50 as attorneys' fees and $793.70 in costs on behalf of Jack and Barbara Hopson. The Court finds pursuant to 42 U.S.C. § 1988 and its inherent power that Byrd shall pay the sum of $1,575.32 as costs and reasonable litigation expenses to Santaniello. The Court finds pursuant to Rule 11, its inherent powers, and § 1927 that Diggs shall pay to Andrew Santaniello the sum of $10,000.00 as attorneys' fees on behalf of Jack and Barbara Hopson. This is based on Diggs' lesser financial ability to pay.
4. The attorneys' fees and costs on behalf of Kenneth Fox and Donald Street.
Counsel for Defendants Fox and Street moved for attorneys' fees pursuant to the Court's inherent authority, 28 U.S.C. § 1927, and 42 U.S.C. § 1988. For the reasons stated herein, the Court will award attorneys' fees and costs as sanctions pursuant to Rule 11, its inherent authority, and 28 U.S.C. § 1927.
Because the Court issued an Order to Show Cause to Byrd and her attorneys, Rule 11 sanctions may be awarded despite the fact that these Defendants did not separately move for the same.
The Court is familiar with the experience and reputation of Mr. Vreeland and Mr. MacLatchie, both of whom have appeared before the undersigned. Each is considered to be an excellent and valued member of the Bar. Their respective hourly rates of $160 and $220 are reasonable and customary, especially when it is noted that they practice in Charlotte. Moreover, the hours spent in representing Street and Fox are clearly reasonable. Although Mr. Vreeland states that his firm expended a total of 490 hours, a review of the records shows that even more time was actually spent. When it is considered that his firm represented two defendants, the hours are even more reasonable. The Court finds that the total attorneys' fees of $88,605.95 are reasonable.
The Court has also reviewed the request for costs and finds them reasonable and necessary in a case of this magnitude. The Court has previously indicated its conclusions regarding the minimum sanction to deter, ability to pay, and the severity of the Rule 11 violations. The Court has found particularly persuasive the report of the SBI agent who, at Sheriff Fox's own invitation, conducted an investigation into the allegations made by Byrd. It is also noted that time records, as well as witnesses accounts, showed that Deputy Street was no where near the Federal Courthouse in Asheville, North Carolina, on the date alleged by Byrd that he "escorted" Cynthia into town in a patrol car. It was also incumbent on counsel to thoroughly investigate the wild accusations against these individuals due to their positions as law enforcement officers.
The Court, therefore, finds pursuant to Rule 11, 28 U.S.C. § 1927, and its inherent authority that Diggs should pay to the law firm of Womble, Carlyle, Sandridge Rice the sum of $20,000.00 as attorneys' fees on behalf of Street and Fox. The Court finds pursuant to Rules 11 and 54, 42 U.S.C. § 1988 and its inherent power that Byrd should pay to the law firm of Womble, Carlyle, Sandridge Rice the sums of $68,605.95 as attorneys' fees, and $23,165.08 in costs on behalf of Street and Fox.
The Court also finds an award justified pursuant to 42 U.S.C. § 1988 which provides that in an "action or proceeding to enforce a provision of sections . . . 1983 [or] 1985 . . . of this title . . . the court, in its discretion, may allow the prevailing party . . . a reasonable attorney's fee as part of the costs[.]"
Street and Fox were alleged to have violated (1) 42 U.S.C. § 1983 by virtue of an unreasonable seizure and the use of excessive force; and (2) 42 U.S.C. § 1985 by denying access to court and the use of excessive force. In those same causes of action, Nelson, Cynthia and her parents were accused of participating in a conspiracy to violate Byrd's civil rights.
These Defendants qualify as prevailing parties under the statute because the Court has found the action was frivolous, unreasonable and without foundation. Bass v. E.I. DuPont de Nemours Co., 324 F.3d 761, 766 (4th Cir. 2003).
In determining a "reasonable" attorney's fee under section 1988, [the Fourth Circuit] has long held that a district court's discretion must be guided strictly by the factors enumerated by the Fifth Circuit in Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir. 1974). The twelve Johnson factors are: (1) the time and labor required to litigate the suit; (2) the novelty and difficulty of the questions presented by the lawsuit; (3) the skill required properly to perform the legal service; (4) the preclusion of other employment opportunities for the attorney due to the attorney's acceptance of the case; (5) the customary fee for such services; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount in controversy involved and the results obtained; (9) the experience, reputation, and ability of the attorney; (10) the "undesirability" of the case; (11) the nature and length of the attorney's professional relationship with the client; and (12) awards in similar cases.
Trimper, 58 F.3d at 73. As has been discussed infra, although frivolous, the time and labor involved in defending this action were great, in large part because of the vexatious manner in which it was litigated. The allegations of the complaint and discovery disclosures amounted to a "shotgun blast" of claims, witnesses and theories which required extensive discovery, not only in the litigation itself but through the resources of outside investigation. This was complicated by the "he said/she said" nature of the wild accusations attributed to the Defendants. While the legal theories were not unduly complicated, they were made so by the factual underpinnings and the ever changing version of events. All of the attorneys have averred as to their normal, customary hourly rates, their experience, and normal practice. Mr. Howell averred that his "solo law practice has been substantially adversely affected because of the preclusion of other employment made necessary by my work in this one case." Howell Affidavit, at 7. At one point, Mr. Howell, who was not receiving regular payments for his services, stopped taking new cases in order provide the services necessary in this one. Id. "My solo law practice has in essence been engulfed by the defense of `Cynthia' in the above entitled case." Id.
Each of the attorneys had a fixed hourly rate agreement with their clients. Each of them has averred that such rate was either customary or below their normal rate. The reputation of the attorneys for Fox and Street, as with the other attorneys, is beyond reproach and both are known to the Court, especially in connection with the representation of law enforcement personnel. And, as stated by Mr. Goldsmith, this was not a case that many attorneys would lightly take. Indeed, Mr. Howell took the case only because of his extensive background with his client in the prior state court action. Considering all of these factors, including the Court's experience with awards in similar cases, the Court finds that the lodestar fee for each of the attorneys is the same as the reasonable fee previously awarded.
As to counsel for Street and Fox, it appears that they performed the majority of investigation of alleged witnesses. This necessitated the use of investigative services, including private investigators. This service was actually compelled by the array of witnesses Byrd claimed would corroborate her claims. The Court, therefore, awards as costs pursuant to § 1988 the sum of $42,458.99 to be paid by Byrd to the law firm of Womble, Carlyle, Sandridge Rice. Bass, supra; Brown v. Gray, 227 F.3d 1278, 1297 (10th Cir. 2000); Jackson v. Austin, ___ F. Supp.2d ___, 2003 WL 21382478 (D.Kan. 2003) (specifically approving an award for the services of a private investigator); accord, Alfonso v. Aufiero, 66 F. Supp.2d 183 (D.Mass. 1999).
In addition, the Court finds that the expenses and advances not included by Santaniello on the bill of costs should be awarded pursuant to § 1988 and reasonable litigation expenses and the sum of $1,575.32 shall be paid by Byrd to Santaniello on behalf of Jack and Barbara Hopson.
5. Sanctions in the form of directives and penalties.
Byrd is enjoined from making any future filing in the Western District of North Carolina relating or pertaining to any allegations made in this action.
A federal court has the inherent authority to suspend or disbar an attorney from practicing before it. In re Synder, 472 U.S. 634, 642-45 (1985); In re Morrissey, 305 F.3d 211, 216 (4th Cir. 2002); In re Evans, 801 F.2d 703, 706 (4th Cir. 1986). Diggs is disbarred from practice in the Western District of North Carolina. A copy of this decision will be provided to the State Bars of North Carolina and South Carolina as well as to each judicial officer of this District.
Byrd shall pay a penalty of $10,000.00 to the Clerk of Court for the United States District Court for the Western District of North Carolina. Because of his lesser financial ability to pay a penalty, Diggs shall pay a penalty of $5,000.00 to the Clerk of Court for the United States District Court for the Western District of North Carolina.
These sanctions are imposed pursuant to Rule 11 and this Court's inherent power for all the reasons stated herein.
VI. ORDER
IT IS, THEREFORE, ORDERED as follows:
1. The Clerk of Court is instructed to provide a copy of this Memorandum of Opinion and Order of Sanctions to the United States Attorney for the Western District of North Carolina;
2. The United States Attorney for the Western District of North Carolina is requested to provide a proper chain of custody of the compact disc admitted into evidence as Plaintiff's Exhibit 1 and the two cassette recordings submitted by the Defendants and to obtain an expert opinion as to the identification and similarity of the voices contained thereon;
3. The United States Attorney for the Western District of North Carolina may use any information contained within this Opinion and any sealed documents filed in this action for any purpose it deems appropriate;
4. The Plaintiff Betty R. Byrd shall pay the following sums by certified check within 30 days from entry of this Memorandum of Opinion to the following individuals or entities and shall file proof of such payment with this Court:
a. $62,142.00 as attorneys' fees to Dennis Howell;
b. $2,781.01 as costs and reasonable litigation expenses to Dennis Howell;
c. $13,741.00 as attorneys' fees to C. Frank Goldsmith;
d. $573.50 as costs and reasonable litigation expenses to C. Frank Goldsmith;
e. $12,172.50 as attorneys' fees to Andrew Santaniello;
f. $793.70 as costs to Andrew Santaniello;
g. $1,575.32 as costs and reasonable litigation expenses to Andrew Santaniello;
h. $68,605.95 as attorneys' fees to the law firm of Womble, Carlyle, Sandridge Rice;
i. $23,165.08 as costs and reasonable litigation expenses to the law firm of Womble, Carlyle, Sandridge Rice;
j. $42,458.99 as costs and reasonable litigation expenses to the law firm of Womble, Carlyle, Sandridge Rice; and
k. $10,000.00 to the Clerk of Court for the Western District of North Carolina;
5. Williams Isaac Diggs shall pay the following sums by certified check within 30 days from entry of this Memorandum of Opinion to the following individuals or entities and shall file proof of such payment with this Court:
a. $10,000.00 as attorneys' fees to Dennis Howell;
b. $10,000.00 as attorneys' fees to C. Frank Goldsmith;
c. $10,000.00 as attorneys' fees to Andrew Santaniello;
d. $20,000.00 as attorneys' fees to the law firm of Womble, Carlyle, Sandridge Rice;
e. $5,000.00 to the Clerk of Court for the Western District of North Carolina;
6. Stuart Axelrod shall pay the sum of $500.00 as costs and reasonable litigation expenses to Dennis Howell;
7. Christopher Danielsen shall pay the sum of $500.00 as costs and reasonable litigation expenses to C. Frank Goldsmith;
8. Betty R. Byrd is hereby ENJOINED from filing any action or pleading in the United States District Court for the Western District of North Carolina arising from or related to the events alleged in this action;
9. William Isaac Diggs is hereby DISBARRED from the practice of law in the United States District Court for the Western District of North Carolina;
10. The Clerk of Court is instructed to serve copies of this opinion on the North Carolina State Bar, the South Carolina State Bar, and each judicial officer of this District.