United States District Court, S.D. Ohio, Eastern Division
Deavers Magistrate Judge.
OPINION & ORDER
ALGENON L. MARBLEY, UNITED STATES DISTRICT JUDGE.
matter is before the Court on Defendants' Motion for
Award of Reimbursing Attorneys' Fees and Request for
Taxation of Costs ("Motion for Attorneys'
Fees"). (ECF No. 87). As the Court indicated in its
September 29, 2017 Order (ECF No. 96), the Court held a
hearing to determine whether Defendants have established
their entitlement to attorneys' fees, and if so, whether
the amount requested is reasonable. For the reasons set forth
below, the Motion for Attorneys' Fees is
DENIED in so far as it requests
reimbursement of attorneys' fees, but the request for
litigation costs in the amount of $1, 071.10 is
Court set forth the factual background in its Order Deferring
Ruling on the Motion for Attorney Fees (ECF No. 96) which is
hereby incorporated by reference. In summary, Plaintiff filed
this lawsuit in January 2014 against Zettler Hardware,
Substruct Systems, LLC ("Substruct"), and Messrs.
Peter Michailidis, Alexander Rouse, Luke Stratton, and
Nicholas Zettler (collectively, the "Individual
Defendants"), alleging fraudulent misrepresentation,
breach of warranty, breach of contract, and unjust enrichment
for facts relating to Defendants sale of a point-of-sale
computer system to Plaintiff. (ECF No. 1). Plaintiff
previously filed two suits related to the same facts-first in
Hawaii state court against Substruct only, and then in
federal district court against Substruct only. The Hawaii
state court case was dismissed for improper venue, and the
federal district court case was voluntarily dismissed because
Plaintiff failed to complete discovery by the deadline and
the Court was unwilling to extend the discovery deadlines.
instant suit was then filed, naming the Individual Defendants
in addition to Substruct. On November 14, 2014, the Court
granted summary judgment as to Plaintiffs fraudulent
misrepresentation claims on statute of limitation grounds,
rejecting Plaintiffs arguments that the Ohio Savings Statute
tolled the statute of limitations. (See ECF No. 42).
On May 26, 2016, Plaintiff filed for a motion for default
judgment against Substruct for failure to defend the action,
which the Court granted on July 1, 2015. (See ECF
Nos. 53, 60). At the hearing on the motion for default
judgment, Plaintiff was unprepared to move forward on his
piercing the corporate veil argument for the remaining
defendants due to incomplete discovery. The Court extended
the discovery deadline, but Plaintiff failed to gain any
evidence to support the veil-piercing theory, which led to
Defendants' second motion for summary judgment (ECF No.
75) which the Court granted, dismissing Plaintiffs remaining
claims (ECF No. 84).
the Sixth Circuit's affirmation of summary judgment in
Defendants' favor, Defendants filed the motion now at
issue, requesting reimbursement of attorneys' fees and
taxation of costs (ECF No. 87). In its September 29, 2017
Order, this Court narrowed down the issue to whether
Plaintiff acted in bad faith/and or abused the judicial
process. (ECF No. 96). The Court held a hearing on the Motion
for Attorneys' Fees on October 31, 2017. (ECF No. 97).
STANDARD OF REVIEW
district court may invoke its inherent powers to sanction a
party or its counsel, "when bad faith occurs."
First Bank of Marietta v. Hartford Underwriters Ins.
Co., 115 F.Supp.2d 898, 904 (S.D. Ohio 2000),
affd, 307 F.3d 501 (6th Cir. 2002). When a party
litigates "in bad faith, vexatiously, wantonly, or for
oppressive reasons, " or when the conduct is
"tantamount to bad faith, " Metz v. Unizan
Bank, 655 F.3d 485, 489 (6th Cir. 2011), the Court may
resort to its inherent authority in order to "manage
[its] own affairs so as to achieve the orderly and
expeditious disposition of cases, " Chambers v.
NASCO, Inc., 501 U.S. 32, 43 (1991) (internal quotation
omitted). That ability is not without limits, however, and
the Court must "exercise caution in invoking its
inherent power" in order to "comply with the
mandates of due process, both in determining that the
requisite bad faith exists and in assessing fees."
Id. at 50 (citation omitted).
under the Court's inherent powers requires that the Court
find "bad faith." Chambers, 501 U.S. at
45-46. Specifically, a court must make "actual findings
of fact": " that the claims advanced were
meritless,  that counsel knew or should have known this,
and  that the motive for filing the suit was for an
improper purpose." Metz, 655 F.3d at 489
(citing Big Yank Corp. v. Liberty Mut. Fire Ins.
Co., 125 F.3d 308, 313 (6th Cir. 1997)). The Sixth
Circuit uses "improper purpose" and "bad
faith" interchangeably. United States ex rel.
Tingley v. PNC Fin. Servs. Grp., Inc., No. 16-1725, 2017
WL 3098178, at *2 (6th Cir. July 21, 2017) (internal
citations omitted). The "mere fact that an action is
without merit does not [alone, however, ] amount to bad
faith." BDT Products, Inc. v. Lexmark Int 7,
Inc., 602 F.3d 742, 753 (6th Cir.2010) (citation
omitted). Rather, "the court must find something more
than that a party knowingly pursued a meritless claim or
action at any stage of the proceedings." Id.
Examples of "something more" include: "a
finding that the plaintiff filed the suit for purposes of
harassment or delay, or for other improper reasons, a finding
that the plaintiff filed a meritless lawsuit and withheld
material evidence in support of a claim, or a finding that a
party was delaying or disrupting the litigation or hampering
enforcement of a court order." Metz, 655 F.3d
at 489 (internal citations omitted). In addition, a Court may
assess attorney fees against a party when the party has
"acted in bad faith, vexatiously, wantonly, or for
oppressive reasons." Alyeska Pipeline Service Co. v.
Wilderness Society, 421 U.S. 240, 258-59 (1975).
Attorneys' Fees Are Not Warranted.
argue that attorneys' fees are warranted on the
fraudulent misrepresentation claim and the breach of
contract, warranty, and unjust enrichment claims. As a
threshold matter, Defendants argue that Plaintiffs fraudulent
misrepresentation claim was "patently frivolous because
it was filed months after the expiration of the statute of
limitations" and Defendants alerted Plaintiff to that
fact numerous times. (ECF No. 87 at 4). Plaintiff counters
that the fraud claim was not meritless because Plaintiff
believed the Ohio Savings Statute applied and thus saved the
claim from dismissal based upon the statute of limitations.
See Transcript of October 31, 2017 Hearing
Defendants argue that the remaining claims of breach of
contract, warranty, and unjust enrichment, are also frivolous
because they are not supported by case law. (ECF No. 87 at
4). Defendants contend that Plaintiff had no basis to pierce
the corporate veil and file the claims against the Individual
Defendants, and that Plaintiff improperly delayed discovery.
See Transcript. Defendants conclude that because
"Plaintiff did little other than file a motion for
default judgment against an unrepresented party, one can only
assume that the purpose of filing this . . . case was to
harass or attempt to force the newly added defendants into
some type of monetary settlement." (Id. at
6-7). Plaintiff disputes Defendants' argument that the
claims are unwarranted by case law and argues that facts
learned during ...