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Williamson v. Recovery Limited Partnership

United States District Court, S.D. Ohio, Eastern Division

March 31, 2017

MICHAEL WILLIAMSON, et al., Plaintiffs,

          Magistrate Judge, Kemp

          OPINION & ORDER


         This matter is before the Court on The Dispatch Printing Company's (“DPC”) Motion for Supplemental Award of Attorney Fees Incurred in Connection with Respondent Richard T. Robol's (“Robol”) Unsuccessful Appeal, (Doc. 1062), and Robol's related request for discovery. For the reasons that follow, the Court GRANTS DPC's Supplemental Motion for Attorney Fees and DENIES Robol's request for discovery.

         I. BACKGROUND

         The facts giving rise to this action are detailed in a number of this Court's opinions, as well as those of the Sixth Circuit. (See, e.g., Doc. 870, Doc. 927, and Williamson v. Recovery Limited Partnership, 826 F.3d 297, 299-301 (6th Cir. 2016)). The Court need not repeat itself, or the Sixth Circuit, here.

         For the purposes of this motion, the facts are simple: in 2006, the Court entered a Consent Order, under which the Court ordered Defendants to provide DPC's accountant with “full access and opportunity to review” all documents and materials “regarding the period from January 1, 2000 through the date of entry of this order, identified in the July 11, 2016 list by [the] Accountant, ” for the purposes of preparing a report of the financial affairs and condition of Columbus Exploration, LLC and Recovery Limited Partnership. (Doc. 84 at 3.) Significant litigation followed regarding Defendants' compliance with the Consent Order, and the Court, at the close of an April 24, 2007 contempt hearing, ordered Defendants to turn over “anything that could be construed as an inventory of any kind regarding assets recovered from the shipwreck that would have been sold during the relevant time of this audit or review.” (Apr. 24, 2007 Tr., Doc. 208 at 56.)

         Between 2007 and 2010, Attorney Richard T. Robol (“Robol”) represented on multiple occasions that the defendants had already turned over the single inventory in their possession, custody, or control. A receiver appointed in 2013 promptly found inventories residing in Robol's property that were not turned over.

         On May 9, 2014, following DPC's motion for sanctions and a three-day evidentiary hearing held on February 25-27, 2014, this Court used its inherent authority to sanction Robol for acting in bad faith by falsely and repeatedly “inform[ing] the Court that his clients had produced ‘all inventories they ever possessed.” (Doc. 927 at 17.)[1] In making these statements, the Court found that Robol had unreasonably relied on his clients, and acted willfully to blind himself to the truth of his and his clients' possession of other inventories. (Id. at 19.)

         As a sanction, the Court ordered Robol to pay “the cost of pursuing [DPC's] Motion for Sanctions, as well as the amount expended by DPC to uncover this fraud and locate the inventories recovered by the Receiver.” (Id. at 24.) At that time, the Court assessed a sanction of $224, 580.00. (Doc. 937 at 4.)

         Robol appealed the sanctions order to the Sixth Circuit, (Doc. 938), and posted a $300, 000 bond. (Doc. 942.) Robol agreed that the bond would cover the judgment amount, “plus any additional amount . . . that may be awarded to Appellee in connection with the appeal (such amount shall be determined by the Court in accordance with the law, whether in the form of costs, damages, interest, costs, attorney's fees, etc.).” (Doc. 942 at 2.)

         The Sixth Circuit affirmed the sanctions order, finding that this Court properly exercised its inherent power to sanction Robol for acting in bad faith by hampering the enforcement of a court order. Williamson, 826 F.3d at 302, 305. Specifically, the Sixth Circuit found strong inferences that Robol: (a) “intended to hamper the enforcement of a court order”; and (b) acted in bad faith because, at the time he made the misrepresentations to the Court, he “knew of, or was willfully blind to, the existence of undisclosed inventories.” Id. at 303-04.

         The Dispatch incurred $59, 708.75 in additional attorney's fees by defending this Court's order on appeal, and now seeks to recover these fees from Robol. (Doc. 1062 at 3.)


         Under the American Rule, litigating parties generally bear their own attorney's fees. Liberis v. Craig, 845 F.2d 326, *5 (6th Cir. 1988). Despite the American Rule, “in narrowly defined circumstances federal courts have inherent power to assess attorney's fees against counsel.” Chambers v. NASCO, 501 U.S. 32, 45 (1991) (internal quotations omitted). One of these circumstances is contempt, or, more formally, “the willful disobedience of a court order.” Chambers, 501 U.S. at 45; Liberis, 845 F.2d at *5. Another is when a person “has acted in bad faith, vexatiously, wantonly, or for oppressive reasons, ” by, for example, “hampering enforcement of a court order.” Chambers, 501 U.S. at 45-46 (internal quotations omitted).

         The Court's inherent power to police itself by assessing attorney's fees for a person who hampers the enforcement of a court order “serv[es] the dual purpose of vindicating judicial authority without resort to the more drastic sanctions available for contempt of court and making the prevailing party whole for expenses caused by his opponent's obstinacy.” Id. (internal quotations and brackets omitted). This Court has “broad discretion under [its] inherent powers to fashion punitive sanctions, ” like the amount of attorney's fees following a finding of bad faith. Williamson, 826 F.3d at 306. For this reason, “there is no requirement of a perfect causal connection between the sanctioned conduct and the attorney's fees awarded[.]” Id. If the prevailing party's appellate attorney's fees “stemmed directly” from the sanctionable conduct in the district court, then the district court may assess these fees on the party that was sanctioned. Liberis, 845 F.2d at *6-*7; see also Chambers, 501 U.S. at 57 (“the party may be sanctioned for abuses of process occurring beyond the courtroom, such as disobeying the court's orders”).

         The Court “must, of course, exercise caution in invoking its inherent power, and it must comply with the mandates of due process, both in determining that the requisite bad faith exists and in assessing fees.” Chambers, 501 U.S. at 50. Due Process requires that Robol “be given notice and an opportunity to be heard.” DiPonio Constr. Co., Inc. v. Int'l Union of Bricklayers & Allied Craftworkers, Local 9, 687 F.3d 744, 752 (6th Cir. 2012). In the Sixth Circuit, “there is no requirement that a full evidentiary hearing be held before imposing sanctions.” Id. (quotations omitted). Rather, the district court has discretion “to determine whether an evidentiary hearing would assist the court in its decision.” Id. (quotations omitted).

         III. ANALYSIS

         A. This Court Determines the Sanction When the Bad Faith Stems from ...

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