bench

By Daniel B. Stanton

Nearly everyone who has practiced civil litigation long enough has experienced a case so meritless that allegations of frivolity and the need for sanctions are thrown around. Despite these feelings, the typical result is a simple dismissal of the case and the defendant footing the bill. Rarely are sanctions ever actually awarded against the frivolous plaintiff or his counsel for filing the suit, despite the intent of Rule 11 and their appropriateness of the sanction. Even rarer are instances where a defendant is sanctioned for defending itself at trial.

Recently, the U.S. 5th Circuit Court reviewed such a case from the WDLA. Our earlier blog article covering the trial court opinion in Dr. George T. Moench, et al. v. M/V Salvation, et al. may be found here. What makes this case unusual is the sanction of attorneys’ fees against the defendant based on the court’s belief that the defendant (or its counsel) essentially wasted everyone’s time by trying liability. According to the court, Marquette “clearly knew the extent of its liability based on the circumstances of the case and the actions of its captain … [and] was fully aware of the fact that [plaintiff] had no liability whatsoever for this allision.” Because attorneys’ fees are not a recoverable item of damages in admiralty cases, the plaintiff made no request for them. Instead, by invoking its inherent authority, the district court sua sponte awarded the full amount of Plaintiff’s expended attorneys’ fees ($295,000) as a punitive sanction against Marquette. For these reasons, among others, Marquette appealed the trial court’s ruling.

On appeal, the 5th Circuit considered the prudence of the attorney’s fees award. Despite the unavailability of attorneys’ fees as a recoverable damage, a court may award attorneys’ fees as a sanction against a party that has acted in “bad faith, vexatiously, wantonly, or for oppressive reasons.” This includes raising frivolous arguments or even meritorious ones simply for the sake of harassment. Such behavior constitutes a sanctionable abuse of the judicial process. While every litigant has a right to vigorously defend or prosecute its claim, the 5th Circuit noted that advocacy designed for no other purpose than to burden an “opponent with unnecessary expenditures of time and effort” is an abuse of the judicial process. In this case, the district court found that Marquette’s defense warranted sanctions for two reasons: (1) Marquette refused to concede liability and (2) Marquette relied on expert valuations that were glaringly inaccurate.

By uncontested testimony from Marquette’s captain, Marquette’s vessel struck the plaintiff’s moored vessel after the captain left the helm unattended during a period of dangerously high waters in the Atchafalaya River. By the time the captain returned the wheel, the Marquette vessel and its tow were out of control, and the captain chose to strike the plaintiff’s vessel to avoid significant damage to his tow. In the face of law and facts to the contrary, Marquette continued to not only deny liability but also argue that the plaintiff’s stationary vessel somehow caused the allision. The district court found that such a meritless defense was made in bad faith and deserving of sanctions. The 5th Circuit found no fault in the district court’s determination that Marquette’s continued contestation of liability was abusive.

Compounding the liability issue, the 5th Circuit also found – like the district court – that Marquette’s use of experts challenging Dr. Moench’s damages claim was also abusive. In support of its damages defense, Marquette used two experts who produced woefully unreliable reports with amazing errors in their damage evaluations. Marquette’s first expert opined on value “without including any comparables, without considering the equipment on the vessel, without an accurate description of the vessel, and without reliable underlying information,” and its second expert “not only failed to correct the glaringly incorrect information set forth in the first expert’s report, but incorporated it into his own.” Given these findings, the 5th Circuit found no abuse of discretion by the district court.

While both the district court and 5th Circuit considered other issues in this case, the discussion of a court’s inherent authority to award attorneys’ fees as a sanction bears great attention. “Zealous” or “vigorous” advocacy is often thrown around, usually unsuccessfully, in defense of a lawyer’s conduct when it is the subject of a sanctions motion. The 5th Circuit’s ruling stands as a continued warning to all litigants that “vigorous advocacy” does not include advancing far-fetched legal theories or legitimate legal theories with obviously unreliable evidence. And while sanctions for abuse of the judicial process are still the exception rather than the rule, attorneys and their clients alike should take note when developing their claims, evidence, and defenses to ensure that are not asserting frivolous arguments, or even meritorious ones that could be perceived as harassing an opponent or wasting the Court’s time.