By Ryan C. Wood
It is not uncommon for daily news channels to report on the Supreme Court of the United States holdings or decisions on cases they choose to hear and rule on. Of course SCOTUS holdings effect all of the United States of America. In the lower district courts throughout the United States and bankruptcy appellate panels there are many appeals each heard and decided each month. These decisions do not always get a lot of attention. Appeals of decisions, judgments or orders issued by lower courts are absolutely a necessary part of our legal system and in bankruptcy law under the Federal Rules of Procedure. It is how laws are interpreted under immense scrutiny and appeals provide all us a better understanding about when and what laws apply to. But are all appeals necessary or well intentioned? No, they certainly are not. Appealing a lower court’s final order or judgment should be considered very carefully. Some appeals are frivolous and are only designed to delay the inevitable or try and inflict one last punch to the gut to incur additional attorneys’ fees and costs. What can I do if a frivolous appeal is filed after I won?
First, discuss with your bankruptcy lawyers whether the appeal is frivolous or if there truly is a reason to file a motion to award damages. Federal Rule of Appellate Procedure 38 provides: If a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee. 28 U.S. Code § 1912 is a little different, it provides for damages and costs on affirmance where a judgment is affirmed by the Supreme Court or a court of appeals, the court in its discretion may adjudge to the prevailing party just damages for his delay, and single or double costs. FRAP 38 can provide damages without the showing of delay, just frivolousness.
So what is a frivolous appeal that warrants damages and attorneys’ fees and costs? What is delay that warrants damages and attorneys’ fees and costs?
A court of appeals has the discretion to impose damages against litigants as a sanction for bringing a frivolous appeal. See Maisano v. United States, 908 F.2d 408, 411 (9th Cir. 1990). Okay, so what is a frivolous appeal? According to the Maison case, an appeal is frivolous if the results are obvious, or the arguments of error are wholly without merit. More or less you did not have a short of overturning the lower court’s decision and you should have known it from the start. To receive damages for the filing of a frivolous appeal a motion or notice from the court with a reasonable amount of time to respond must be provided. See Gabor v. Frazer, 78 F.3d 459, 459-60 (9th Cir.1996).
A court of appeals may on its own accord issue an order to show cause why the court should not award attorneys’ fees and double costs if the arguments in the appeal are without merit. Moreover, the court of appeals can impose the award of damages jointly and severally against the client and their attorney. See Int’l Union of Bricklayers Local 20 v. Martin Jaska, Inc., 752 F.2d 1401, 1407 & n. 8 (9th Cir.1985). Joint and several liability means the party that is awarded damages may collect the full amount of the damages from either party no matter what their share of the liability for the damages is. Damages for frivolous appeals can be imposed joint and severally given that the client and attorney are in the best position to determine who caused the appeal to be filed and fairly apportion who is at fault.
In a published opinion from the Ninth Circuit Court of Appeals on July 13, 2010, In Re: THOMAS V. GIRARDI, Esq.; WALTER J. LACK, Esq.; PAUL A. TRAINA, Esq., et al., Nos. 08-80090. These Los Angeles attorneys were significantly sanctioned for a frivolous appeal. The sanctions were imposed as follows:
– Respondents Thomas V. Girardi and the Girardi Firm shall reimburse Defendants Dow Chemical Company, Dole Food Company, and Shell Chemical Company (collectively, “Defendants”) their attorneys’ fees and costs, but not to exceed the aggregate sum of $125,000.00.
– Respondents Walter J. Lack and the Lack Firm shall reimburse Defendants their attorneys’ fees and costs, but Lack’s individual liability shall not exceed the aggregate sum of $250,000.00.
– Respondent Paul A. Traina shall reimburse Defendants their attorneys’ fees and costs, but not to exceed the aggregate sum of $10,000.00
– Respondent [the young associate] shall reimburse Defendants their attorneys’ fees and costs, but not to exceed the aggregate sum of $5,000.00.
– Respondent the Lack Firm shall be jointly and severally liable for the sanctions imposed on Respondents Traina and the young associate so that its aggregate liability shall not exceed $265,000.00.
– Respondents aggregate liability to each Defendant shall not exceed $130,000.00, or said Defendants’ actual attorneys’ fees and costs, whichever is less.