National Legal Malpractice Conference Fall 2016 Sponsored by ABA Standing Committee on Lawyers Professional Liability

Seeking Sanctionary: The Evolving Role of Sanctions and Civility in Litigation

Courts are increasingly imposing sanctions on attorneys for their litigation conduct. Attorney behavior that once was considered uncivil, or rude, may now trigger the imposition of sanctions some of which are now including nontraditional, non-monetary forms of sanctions. Learn about recent trends in courts’ use of sanctions, how to defend against sanction motions, and the role civility can play in litigation to reduce the risk of sanctions. Attendees will learn about recent cases that have triggered newer sanction forms, the varying kinds of attorney conduct that may trigger sanctions, strategies for defending sanctions motions, and how basic principles of civility can significantly reduce the risk of sanctions without hindering zealous advocacy. The panel will also discuss the coverage implications raised by sanctions motions under many lawyers’ professional liability policies

MODERATOR

Allison L. Wood, Principal, Legal Ethics Consulting, Chicago, Illinois

SPEAKERS

David Jimenez-Ekman, Jenner & Block, Chicago, Illinois Edith R. Matthai, Partner, Robie & Matthai, PC, Los Angeles, CA Tony Vranas, Claims Manager, CNA, Chicago, Illinois

National Legal Malpractice Conference Fall 2016 Sponsored by ABA Standing Committee on Lawyers Professional Liability

Seeking Sanctionary: The Evolving Role of Sanctions and Civility in Litigation

Table of Contents

1. Court Ordered Sanctionsby David Jimenez-Ekman and Alisa Finelli

2. Collection of Court-Ordered Sanctions in Federal and State Court by Avigael C. Fyman

3. Bartronics, Inc. v. Power-One, Inc., et al.,245 F.R.D.532 (S.D. Alabama)(2007)

4. In Re Marriage of Richard Todd Wixom, 182 Wash. App. 881 (2014)

5. Northern Virginia Real Estate, Inc., et al., v. Martins, 283 Va.86 (2012)

6. State Bar of California Formal Opinion No. 1997-151

7. New York County Lawyers’ Association Committee on Professional EthicsQuestion No. 683

8. Model Rule 1.7 Conflicts of Interest

9. §6086.7 Notification to State Bar of Court Actions (2016)

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Court-Ordered Sanctions: Ethical Issues David Jimenez-Ekman Alisa Finelli Jenner & Block LLP

This article discusses four topics related to court-ordered sanctions: (1) who pays monetary sanctions, (2) ethical issues when responding to sanctions motions, (3) strategic use of sanctions, and (4) discipline potential when courts order sanctions.

I. Who Pays Monetary Sanctions

In certain circumstances, monetary sanctions may be imposed against counsel and against

parties. For example, Rule 11 of the Federal Rules of Civil Procedure permits a court to impose sanctions on “an attorney, law firm, or party that violated the rule or is responsible for the violation.” Fed. R. Civ. Pro. 11(c)(1). Many state laws similarly provide for sanctions to be imposed against counsel and parties.1

Some federal courts have held that the sanctioning of a party requires that the party had

“actual knowledge” or “was aware” of the wrongdoing. See White v. General Motors, Inc., 908 F. 2d 675, 685-86 (10th Cir. 1990); Brown v. Artus, 647 F. Supp. 2d 190, 205 (N.D.N.Y. 2009). Generally, sanctions are imposed against clients for factual misrepresentations in pleadings or where “it is clear that the client is the mastermind behind the frivolous case.” Barash v. Kates, 585 F. Supp. 2d 1347, (S.D. Fla. 2006).

In Watkins v. Smith, the court ordered Rule 11 sanctions be imposed against the

plaintiff’s counsel only and not against the plaintiff himself. No. 12 Civ. 4635 (DLC), 2013 WL 655085, at *10 (S.D.N.Y. Feb. 22, 2013). The court imposed the sanctions based on the submission of an amended complaint with factual allegations that were “utterly lacking in evidentiary support.” Id. The court acknowledged that the plaintiff could be held responsible for the violation. Id. However, because there was little indication that the plaintiff himself participated in the decisions regarding which individuals and entities would be named as defendants, the court did not impose sanctions against the plaintiff. Id.

Courts have also ruled that when an attorney and a client share responsibility for a

violation of Rule 11, joint and several liability may be imposed against the attorney and the 1 See e.g. N.Y. Comp. Codes R. & Regs. Tit. 22, § 130-1.1; Cal. Civ. Proc. Code § 128.7(c); Ill. S. Ct. R. 137; Va. Code § 8.01-271.1; Wash. Super. Ct. Civ. R. 11; Tex. Civ. Prac. & Rem. Code Ann. § 10.004.

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client. See People Nat. Bank, N.A. v. American Coal Co., Civil No. 09-761-GPM, 2012 WL 1606014, at *3 (S.D. Ill. May 8, 2012); Northern Virginia Real Estate, Inc. v. Martins, 720 S.E.2d 121, 136 (Va. 2012).

Conversely, certain sanctions may be imposed only against an attorney. For example,

under Rule 11, a court may not impose a monetary sanction against a represented party for a legally frivolous argument or an argument unsupported by existing law. Fed. R. Civ. Pro. 11(c)(5)(A). Similarly, under Section 1927, a court may sanction only an offending attorney and clients may not be sanctioned. Berstein v. Boies, Schiller & Flexner, LLP, 416 F. Supp. 2d 1329, 1331 (S.D. Fla. 2006).

Attorney-Client Agreements to Allocate Sanctions At least two committees on professional responsibility and ethics have considered the permissibility of agreements between attorneys and clients to allocate payment of sanctions that may be imposed in the future. The Standing Committee on Professional Responsibility and Conduct of the State Bar of California stated in a formal opinion issued in 1997 that such agreements are not “unethical per se.” State Bar of Calif. Standing Comm. On Prof’l Responsibility & Conduct, Formal Op. 1997-151 (1997). The committee found that the agreement may be unethical in particular circumstances, including if the agreement requires the client to pay sanctions which are ordered by the court as a result of the lawyer’s misconduct or which the court intends the lawyer to bear alone. Id. at 3.

In a separate opinion, the Committee on Professional Ethics of the New York County Lawyers’ Association found that a lawyer may never shift the burden of costs and sanctions to a client where the court has specifically assessed costs and sanctions against the lawyer or the lawyer’s firm. New York County Lawyers’ Ass’n Comm. On Prof’l Ethics, Op. No. 683 (1990). In addition, the committee found that it would be “improper for a lawyer to request reimbursement for sanctions imposed because of the lawyer’s negligence, recklessness, willful misconduct or malpractice.” Id. at 2. The committee also found that it is impermissible for a lawyer to agree with a client in a retainer agreement that the client will be liable for any costs and sanctions imposed. Id. at 3. However, the New York County committee held that, in certain circumstances, an attorney may obtain the client’s agreement to pay costs or sanctions not specifically imposed against the lawyer. Id. One such circumstance is when an attorney believes in good faith there are grounds for an extension, modification or reversal of existing law, but acknowledges that the court may not agree and the argument may result in the imposition of costs or sanctions. Id. If the attorney explains the risks to the client and the client wishes to proceed, the attorney may agree with the client that the client will pay the costs of the sanctions. Id. Additionally, if a lawyer reasonably believes that a court’s order for sanctions could be reversed on appeal, the attorney may agree to forgo such a review at the request of the client and in exchange for the client’s payment of the sanction. Id. at 4. The committee held that such an arrangement is not unethical as long as “(1) the lawyer’s belief that the sanctions would be

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reversed is bona fide and well grounded in law; (2) the client is fully informed of the chances of success and any likely effect of such reconsideration on the client’s case or other interest; and (3) the client’s decision to reimburse counsel is voluntary and free from undue influence or pressure.” Id.

II. Ethical Issues When Responding to Sanctions Motions

Courts have acknowledged that ethical issues may arise when responding to a motion for sanctions. Specifically, a sanctions motion may create a conflict of interest for the responding attorney or the need to disclose confidential client information.

In Northern Virginia Real Estate, Inc. v. Martins, the Supreme Court of Virginia found

that “difficulties may arise” when a court sanctions a represented party and the party’s attorney. 720 S.E.2d 121, 136 (Va. 2012). In Northern Virginia Real Estate, the trial court imposed sanctions jointly and severally against the plaintiffs and their attorney for filing a lawsuit that lacked a factual basis and was brought for improper purposes. Id. at 127. The plaintiffs and their attorney appealed separately on several grounds. Id. at 128. The court held that “[l]itigation involving the allocation of sanctions may pit attorney against client, as each tries to prove why the other is responsible for the sanctionable conduct.” Id. at 136. In addition, the court noted that disclosure of otherwise-privileged information may become an issue. Id. The court found that, to avoid such conflicts, if an attorney and client disagree about who is at fault for sanctions, the attorney should withdraw as the client’s attorney and the client and the attorney should obtain their own counsel. Id. at 136. The court further held that the trial court was not required to allocate fault of apportion sanctions between the plaintiffs and their counsel. Id. at 135-36. The court ruled that because most of the information necessary to determine allocation of fault may be hidden by the attorney-client privilege, the sanctioned parties carry the burden of providing the trial court with evidence sufficient to apportion the sanctions. Id. Because the plaintiffs failed to do so and because the trial court found there was “substantial evidence of sanctionable behavior on the part of both the litigants and the lawyer,” the Virginia Supreme Court upheld the sanctions imposed joint and severally against the plaintiffs and their counsel. Id. at 136.

An appellate court in Washington has also held that a conflict of interest exists when an

attorney and client disagree about who is at fault for sanctionable conduct. In re Marriage of Wixom and Wixom, 332 P.3d 1063, 1072 (Wash. Ct. App. 2014). In Marriage of Wixom, the trial court imposed sanctions against the client and the client’s attorney. Id. at 885. The sanctions were imposed for initiating a meritless proceeding intended to harass, embarrass, threaten, and intimidate the opposing party and others. Id. at 895. The attorney continued his representation of the client and appealed the sanctions. Id. at 897. However, the attorney argued on appeal that, if affirmed, the sanctions should be borne by the client alone. Id. The appellate court held that the attorney had a conflict of interest in representing his client and his own personal interest, which were directly adverse. Id. at 899. The court ruled that an attorney is not

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required to withdraw from representing his client each time a sanctions motion is targeted against him and his client. Id. at 901. However, if an attorney seeks to limit a sanction award against only his client, the attorney must withdraw from representing the client. Id. The court further ruled that, because the attorney was attempting to represent two opposing parties in the same litigation, the client could not waive the conflict of interest. Id. at 902. Furthermore, the court held that, under Washington Rules of Professional Conduct, withdrawal of representation is required when such a conflict of interest arises. Id. at 904. Because the attorney refused to withdraw, the court took the “unusual step” of disqualifying the attorney, on its own initiative, from representing the client. Id. at 884, 905.

The appellate court in Wixom also considered whether the attorney could represent

himself, given his continuing obligations to the client. Id. at 906. The court noted the Washington Rules of Professional Conduct prohibition against representing one client against other clients in the same or substantially related matter after a dispute arises among the clients in the matter. Id. The court also considered the attorney’s duty of loyalty to not harm a client’s interest. Id. at 908. Although the Wixom court chose not to disqualify the attorney from representing himself, it ruled that the attorney was required to employ independent counsel if he chose to argue that the sanctions should be imposed only on his client. Id. The court found that such an argument would clearly implicate the attorney’s duty not to harm a former client in a matter related to the attorney’s representation of the client. Id. Moreover, the court held that the attorney could not, through independent counsel in a later filing, disclose any confidences of his client unless the disclosure reasonably responds to any accusation made by the client. Id. at 909.

The State Bar of California has also considered the ethical issues implicated when

responding to a motion for sanctions. In a Formal Opinion issued in 1997, the Standing Committee on Professional Responsibility and Conduct of the State Bar of California analyzed a defense attorney’s ethical duties when, in the course of civil litigation, the plaintiff’s counsel files a motion to compel further responses to discovery and requests sanctions against the attorney and the client. State Bar of Calif. Standing Comm. On Prof’l Responsibility & Conduct, Formal Op. 1997-151 (1997). The committee held that a motion for sanctions which would affect the client’s interest before the court or impose liability on the client is “a significant development in the representation” and the lawyer has a duty to inform the client of the motion and request for sanctions. Id. at 2. At a minimum, the lawyer must inform the client of the existence of the motion, the fact that the sanctions are being sought against client and lawyer, the amount of sanctions sought and the practical consequences of the motion if granted or denied. Id. In addition, the committee held that the lawyer has a duty to supply the client with additional information necessary to make an informed decision regarding the motion. Id.

The California State Bar committee also held that when a lawyer and a client agree to

take a common position with respect to a sanctions motion, a conflict of interest necessitating written disclosure to the client is not present. Id. Therefore, an “ordinary motion for sanctions in connection with a discovery dispute does not create a conflict of interest” requiring written

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disclosure of the attorney’s interest in the subject matter of the representation. Id. However, if the attorney and client present different defenses to the motion, the committee found that a conflict of interest does arise and requires a written disclosure by the attorney to the client. Id. If the attorney and client agree on the presentation of different defenses, the attorney may continue to represent the client in the motion if the defenses are not competing. Id. If the defenses are competing, the attorney cannot represent the client in opposing the motion. Id. The committee also found that an attorney presenting a different or competing defense is required to protect the client’s confidential information in opposing the motion. Id. at 3. The committee further held that if an attorney “insists on exonerating himself from liability for the sanctions and client does not agree with such an approach, attorney must withdraw.” Id. In such circumstances, the attorney must continue to maintain the client’s confidential information, unless the attorney needs to reveal the confidential information to defend against the accusations by the client that the attorney is solely responsible for the sanctions and the information is relevant to an alleged breach of duty arising out to of the lawyer-client relationship. Id.

III. Strategic Use of Sanctions

In light of the potential for conflicts of interest to arise between an attorney and a client, opposing parties may attempt to use sanctions motions to drive a wedge between the lawyer and the client or to disqualify the lawyer. However, the advisory committee notes to the Federal Rules of Civil Procedure explicitly prohibit such strategic uses of sanctions motions.

The Advisory Committee Notes to the 1993 Amendments to Rule 11 state:

Rule 11 motions should not be made or threatened for minor, inconsequential violations of the standards prescribed by subdivision (b). They should not be employed as a discovery device or to test the legal sufficiency or efficacy of allegations in the pleadings; other motions are available for those purposes. Nor should Rule 11 motions be prepared to emphasize the merits of a party’s position to exact an unjust settlement, to intimidate an adversary into withdrawing contentions that are fairly debatable, to increase the costs of litigation, to create a conflict of interest between attorney and client, or to seek disclosure of matters otherwise protected by the attorney-client privilege or the work-product doctrine.

Fed. R. Civ. P. 11, advisory committee’s note to 1993 amendment.

In addition, federal courts have admonished parties who use Rule 11 or other ethical rules as “combative tools.” See Bartronics, Inc. v. Power-One, Inc., 245 F.R.D. 532, 538 (N.D. Ala. 2007). In Bartronics, the plaintiff accused defendants’ counsel violating Rule 11 by failing to properly investigate its allegations and lacking any reasonable basis for its allegations. Id. However, the district court found that the plaintiff offered no evidence to support its Rule 11 claim. Id. The court ruled that Rule 11 “is not a bargaining chip to be flashed cavalierly in

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hopes of securing a strategic advantage” and should not be used as “a weapon for intimidating or browbeating opposing counsel.” Id. The court warned that Rule 11 sanctions should be imposed “sparingly” because they can “affect the reputation and creativity of counsel.” Id. (quoting Hartmarx Corp. v. Abboud, 326 F.3d 862, 867 (7th Cir. 2003). The court denied the motion for Rule 11 sanctions and criticized the plaintiff’s counsel for “leaping to reckless accusations of sanctionable misconduct by their counterparts.” Id. See also Mobile County Water, Sewer and Fire Protection Authority, Inc. v. Mobile Area Water and Sewer System, Inc., No. 07-0357-WS-M, 2008 WL 4012956 at *2, n.2 (S.D. Ala. Aug. 26, 2008) (noting that “this Court has consistently taken a dim view of sanctions filed by litigants seeking to punish their adversaries based on acrimony between counsel, to vindicate counsel’s position of disagreement with opposing counsel, or to extract some strategic leverage.”)

IV. Discipline Potential When Courts Issue Sanctions

Court-ordered sanctions may, in certain circumstances, lead to referrals of attorney misconduct to a state disciplinary authority. Under Rule 11, federal courts, in their discretion, may refer a matter to disciplinary authorities. Fed. R. Civ. P. 11, advisory committee’s note to 1993 amendment (stating that the court “has available a variety of possible sanctions to impose for violations,” including “referring the matter to disciplinary authorities”).

In Warren v. Baker, the court ruled that plaintiff’s counsel violated Rule 11 and ordered

sanctions against the attorney. No. 07-cv-0188, 2007 WL 4111428, at *1 (M.D. Pa. Nov. 16, 2007). The court found that the attorney filed the lawsuit for the improper purposes of slander and harassment and without any legal or factual basis. Id. The court also found that the attorney needlessly delayed the action, made misrepresentations to the court, filed frivolous motions, and engaged in a “steady stream of uncivil, disrespectful, and unprofessional ad hominem attacks on the parties, opposing counsel, and [the] court.” Id. The court considered the advisory committee notes to Rule 11, as well as Third Circuit case law instructing district courts to consider a range of sanctions “to achieve Rule 11’s main purpose of deterring undesirable behavior.” Id. at *2 (quoting Zuk v. E. Pa. Psychiatric Inst. of the Med. Coll. of Pa., 103 F. 3d 294, 301 (3d Cir. 1996)). The court ruled that the attorney’s conduct “evince[d] a clear misunderstanding of the proper purposes of the civil justice system, a deliberate ignorance of substantive law, and total disregard for his professional responsibilities,” which “call[ed] into doubt his fitness to practice” before any court. Id. at *2. The court therefore referred the matter to the Disciplinary Board of the Supreme Court of Pennsylvania for investigation and appropriate discipline. Id.

Federal courts may also refer attorney misconduct to disciplinary authorities under their

inherent power to “control admission to its bar and to discipline attorneys who appear before it.” In re Guidant Corporation Implantable Defibrillators Products Liability Litigation, MDL No. 05-1708 (DWF/AJB), 2009 WL 5195841, at *8 (D. Minn. Dec. 15, 2009) (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991)). In Guidant, the district court used its inherent power to

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sanction an attorney representing claimants in a multidistrict litigation. Id. The court found that the lawyer “contributed to the common detriment” of the multidistrict litigation by, among other things, failing to disclose a settlement allocation plan to his clients. Id. The court held that the attorney mislead his clients by withholding available information and “damaged both the integrity of the Guidant MDL and the overall system of justice.” Id. The court fined the attorney $50,000 and forwarded a copy of its order to the Minnesota Office of Lawyers Professional Responsibility, the Office of Chief Disciplinary Counsel for State Bar of Texas, and to the appropriate ethics boards in all states or territories in which a Guidant MDL client of the attorney resides. Id.

Under California law, reporting of certain sanctions to the state bar is mandatory. Section 6086.7 of the California Business and Professional Code states that a court is required to notify the State Bar of “the imposition of any judicial sanctions against an attorney, except sanctions for failure to make discovery or monetary sanctions or less than one thousand dollars ($1,000).” Cal. Bus. & Prof. Code § 6086.7. See Personal Court Reporters, Inc. v. Gary Rand, 205 Cal. App. 4th 182, (Court of Appeal, Second District, Division 4 2012) (applying § 6086.7 and directing the clerk to notify the State Bar of the sanctions imposed by the opinion and order). Section 6068 of the California Business and Professional Code also imposes a duty on the individual attorney to report in writing to the agency charged with attorney discipline the imposition of judicial sanctions against the attorney, except for sanctions for failure to make discovery or monetary sanctions of less than $1,000. Cal. Bus. & Prof. Code § 6068(o)(3). See Matter of Varakin, 1994 WL 606153 (Review Department of the State Bar Court of California Nov. 1, 1994) (holding that the duty of the court under § 6086.7 and the duty of the attorney under § 6068(o)(3) are not “alternative” but are separately imposed by statute on each party).

Mandatory reporting of judicial sanctions to disciplinary authorities is “unusual.” Arthur F. Greenbaum , The Automatic Reporting of Lawyer Misconduct to Disciplinary Authorities: Filling the Reporting Gap, 73 OHIO ST. L. J. 437, 468 n.139 (2012). However, some federal district courts have adopted local rules which impose duties to refer certain conduct to state disciplinary authorities. Id. (citing D. Md. R. 602; N.D. & S.D. Miss. Civ. R. 83.1(c)(1); D. Nev. R. 10-7(d); E.D. Tex. Civ. R. AT-2(e)).

Reporting requirements of state and model rules for attorney and judicial conduct may also provide a basis for referring sanctioned conduct to disciplinary authorities. Under the American Bar Association’s (ABA) Model Code of Judicial Conduct, a judge “having knowledge that a lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question regarding the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects shall inform the appropriate authority.” MODEL CODE OF JUDICIAL CONDUCT Canon 2, r. 2.15(B) (AM. BAR ASS’N 2011). A handful of states have adopted this

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provision of the Model Code.2 Under the ABA’s Model Rules of Professional Conduct, a lawyer “who knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer’s honest, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority.” MODEL RULES OF PROF’L CONDUCT r. 8.3(a) (AM. BAR ASS’N 2016). Several states have adopted an equivalent provision.3 However, commentators observe that these general obligations to report lawyer misconduct provide broad discretion and are often ignored, resulting in underreporting of misconduct. See Arthur F. Greenbaum, The Automatic Reporting of Lawyer Misconduct to Disciplinary Authorities: Filling the Reporting Gap, 73 OHIO ST. L. J. 437, 439-40 (2012); Michael S. McGinniss, Sending the Message: Using Technology to Support Judicial Reporting of Lawyer Misconduct to State Disciplinary Agencies, 2013 PROF. LAW. 37, 42-43 (2013).

2 See N.H. Sup. Ct. R., R. 38, Code of Jud. Conduct, Canon 2, R. 2.15(B); Mont. R., Code of Jud. Conduct, R. 2.16(B); Minn. Stat., Code of Jud. Conduct, R. 2.15(B); Colo. Code of Jud. Conduct, R. 2.15(B); Tenn. Sup. Ct. R., R. 10, Code of Jud. Conduct, R. 2.15(B); D.C. R. of Jud. Conduct, R. 2.15(B); N.D. Code of Jud. Conduct, R. 2.15(B); Wyo. Code of Jud. Conduct, R. 2.15(B); W. Va. Code of Jud. Conduct, R. 2.15(B); Ariz. Rev. Stat., Sup. Ct. R., R. 81, Code of Jud. Conduct, R. 2.15(B); Utah Jud. Admin. Code, Canon 2.15(B); Ind. Code of Jud. Conduct, Canon 2.15(B). 3 See e.g. Colo. R. Prof’l Conduct, R. 8.3(a); Conn. R. Prof’l Conduct, R. 8.3(a); Del. R. Prof’l Conduct, R. 8.3(a); Md. Attorneys’ R. of Prof’l Conduct, R. 19-308.3(a); N.Y. R. of Prof’l Conduct, R. 8.3(a); Ohio R. of Prof’l Conduct, R. 8.3(a); Pa. R. of Prof’l Conduct, R. 8.3(a); D.C. R. of Prof’l Conduct, R. 8.3(a).

This article collects recent federal and state cases concerning the imposition of sanctions by Courts.

Sanctions Imposed By Federal Courts

Federal courts have imposed monetary sanctions under Rule 11, see Diaz v. First Marblehead Corp., 2016 U.S. App. LEXIS 3267 (11th Cir. Feb. 25, 2016); Shine v. Bayonne Board of Educ., 633 Fed. Appx. 820 (3d Cir. 2015); Rankin v. City of Niagra Falls, 569 Fed. Appx. 25 (2d Cir. 2014), and have also imposed sanctions and attorneys’ fees under 28 U.S.C. §1927, see Boyer v. BNSF Railway Co., 2016 U.S. App. LEXIS 10021 (7th Cir. June 1, 2016)(reversing district court’s denial of sanctions and awarding attorneys’ fees and costs under §1927 based upon counsel’s unreasonable and vexatious conduct); Nollner v. Southern Baptist Convention, Inc., 628 Fed. Appx. 944 (6th Cir. 2015) (affirming imposition of sanctions in the form of attorneys’ fees under §1927); Lightspeed Media Corp. v. Smith, 761 F.3d 699 (7th Cir. 2014) (affirming imposition of §1927 sanctions against Prenda Law principals).

Federal courts have also imposed sanctions for discovery violations and other bad faith conduct. See Timms v. LZM, L.L.C., 2016 U.S. App. LEXIS 12377 (5th Cir. July 5, 2016) (affirming district court’s striking of amended complaint and awarding costs and fees as sanction for failure to comply with discovery order); Ingenuity13 LLC v. Doe, 2016 U.S. App. LEXIS 10557 (9th Cir. June 10, 2016) (affirming imposition of sanctions, in the form of attorneys’ fees and costs and punitive multiplier against Prenda Law principals); RDLG, LLC v. Leonard, 2016 U.S. App. LEXIS 9390 (4th Cir. May 23, 2016) (affirming imposition of sanction of default judgment in plaintiff’s favor against defendant for misconduct during pre-trial conference); Sun River Energy, Inc. v. Nelson, 800 F.3d 1219 (10th Cir. 2015) (affirming imposition of sanction against attorney for discovery violation); McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240 (3d Cir. 2014) (affirming imposition of monetary sanctions against party under FRCP 37 for failure to comply with discovery order).

Federal cases involving the imposition of sanctions sua sponte include Sciarretta v. Lincoln Nat’l Life Ins. Co., 778 F.3d 1205 (11th Cir. 2015) (upholding imposition of sua sponte sanctions upon a finding of bad faith); Nurse v. Sheraton Atlanta Hotel, 618 Fed. Appx. 987 (11th Cir. 2015) (affirming sua sponte dismissal of pro se plaintiff’s complaint); Welk v. GMAC

Court-Ordered Sanctions in Federal and State Courts

Edith Matthai, Robie & MatthaiAvigael C. Fyman, Rivkin Radler LLP

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Mortgage, LLC, 720 F.3d 736 (8th Cir. 2013) (affirming sua sponte imposition of sanctions and attorneys’ fees based upon counsel’s abusive litigation tactics); Erwin v. Russ, 481 Fed. Appx. 128 (5th Cir. 2012) (affirming imposition of sanctions, sua sponte, for filing frivolous claims); and Barker v. U.S. Nat’l Bank, 2015 U.S. Dist. LEXIS 46888 (D. Ore. Apr. 9, 2015) (directing pro se plaintiff to show cause as to why his frivolous litigation tactics did not warrant sanctions).

Insurance coverage cases involving the imposition of sanctions include Bowman, Heintz, Boscia & Vician, P.C. v. Valiant Ins. Co., 35 F. Supp. 3d 1015 (N.D. Ind. 2014); Wallis v. Centennial Ins. Co., Inc., 982 F. Supp. 2d 1114 (E.D. Cal. 2013) (insurer was entitled to reimbursement of attorneys’ fees and costs to defend against sanctions motion); McKeen v. Cont’l Casualty Co., 2011 U.S. Dist. LEXIS 97046 (E.D. Mich. 2011) (knowledge of terminating sanctions in underlying case constituted prior knowledge of potential claim); and Benjamin A. Post, Esq. v. St. Paul Travelers Ins. Co., 691 F.3d 500 (3d Cir. 2012) (affirming dismissal of bad faith claim against insurer for failure to cover sanctions proceeding).

Sanctions Imposed By State Courts

State courts generally impose sanctions in cases of frivolous or fraudulent litigation conduct. See, e.g. Manning v. Bellafiore, 2016 R.I. LEXIS 93 (R.I. June 24, 2016) (affirming imposition of monetary sanctions on party for disjunction between party’s pre-trial disclosures and testimony at trial, but reversing imposition of sanctions as to counsel); Smizer v. Drey, 2016 SD 3 (S. Dak. 2016) (affirming imposition of attorneys’ fees as sanction for failing to conduct a reasonable investigation to support claim for punitive damages and improperly seeking punitive damages to gain leverage in settlement); Hayward v. King, 127 A.3d 1171 (Del. 2015) (imposing monetary sanctions on pro se litigants for engaging in “exasperating course of conduct” that prolonged proceedings); Ferguson v. Shelby, 179 So. 3d 1060 (Miss. 2015) (affirming dismissal of claim as sanction for plaintiff’s having signed fraudulent affidavit); Grove v. Gamma Center, 2015-Ohio_1180 (Ohio App. 2015) (affirming imposition of monetary sanctions on party and counsel for frivolous litigation conduct); Ashley Healthcare Plan v. Dillard, 177 So. 3d 175(Miss. 2015) (affirming imposition attorney’s fees on party as sanction for frivolous removal to federal court); AQ Asset Management LLC v. Levine, 128 A.D.3d 620 (N.Y. App. Div. 2015) (holding that Court properly sanctioned defendant for bringing a frivolous motion and properly imposed sanctions on counsel for violating rules for electronic filing of material under seal); Kambis v. Considine, 778 S.E.d2d 117 (Va. 2015) (affirming trial court’s imposition of sanctions against party who pursued litigation in a matter demonstrating he was less interested in vindicating legal rights than in intimidating and injuring defendant); Guava LLC v. Merkel, 2014 Minn. App. Unpub. LEXIS 829 (Minn. App. Aug. 4, 2014) (affirming imposition of attorney-fee sanctions for bad-faith pursuit of litigation in Prenda Law matter); Zavodnik v. Harper, 17 N.E.3d 259 (Ind. 2014) (discussing possible sanctions that may be imposed on vexatious litigants).

Sanctions may also be imposed in cases of discovery violations. See Osborne v. Todd Farm Service, 247 Cal. App. 4th 43 (Cal. App. 2016) (imposing terminating sanction for ‘pervasive misconduct’); North American Props. v. McCarran Int’l Airport, 2016 Nev. Unpub. LEXIS 487 (Nev. Feb. 19, 2016) (affirming imposition of case-ending sanctions based upon repeated discovery violations); Thompson v. Kirby, 2016 Del. LEXIS 259 (Del. Apr. 25, 2016)

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(affirming court’s imposing sanction of dismissal for failure to comply with discovery order); Cumberland Ins. Group v. Delmarva Power, 226 Md. App. 691 (Md. App. 2016) (affirming imposition of sanction dismissing case where plaintiffs engaged in spoliation of evidence); Jackson v. Auto-Owners Ins. Co., 2016 Mich. App. LEXIS 1233 (Mich. App. 2016) (affirming dismissal of claim as sanction for failure to comply with discovery); Reitano v. Wexner Medical Center, 2016-Ohio-4557 (Ohio App. 2016) (affirming dismissal of claim as sanction for discovery violations); Preston v. Amadei, 238 Ariz. 124 (Ariz. App. 2015) (affirming award of attorney’s fees as a sanction for disclosure violation); Fu v. Rhodes, 2015 UT 59 (UT 2015) (sanction of default judgment was not abuse of discretion where party repeatedly failed to meet discovery deadlines); Kallas v. Spinozzi, 2014 COA 164 (Col. App. 2014) (affirming imposition of litigation-ending sanction for serious discovery violation); Davis v. Parkview Apartments, 409 S.C. 266 (S.C. 2014) (affirming dismissal of claims as appropriate sanction for repeated discovery violations); SynEcology Partners, L3C v. Business RunTime, Inc. 2016 VT 29 (VT. 2016)(affirming dismissal of complaint as sanction for discovery violations).

Other recent state court decisions involving sanctions include San Diegans for Open Government v. City of San Diego, 247 Cal. App. 4th 1306 (Cal. App. 2016) (discussing recent change in statute authorizing sanctions and reversing denial of sanctions); Aubuchon v. Brock, 2015 Ariz. App. Unpub. LEXIS 628 (Ariz. App. May 14, 2015) (under Arizona law, law firm representing itself pro se was ineligible to receive attorney’s fees as sanctions but could recover expenses as a sanction); Seagate Technology, LLC v. Western Digital Corp., 854 N.W.2d 750 (Minn. 2014) (holding that arbitrator did not exceed his authority in imposing punitive sanctionson party to arbitration); Pegasus Aviation I, Inc. v. Varig Logistica, S.A., 26 N.Y.3d 543 (N.Y. 2015) (setting for standard for imposition of sanctions based upon spoliation of evidence and remanding for determination in accordance with opinion).

State cases involving the imposition of sanctions sua sponte include We Care Transp. Inc. v. Branch Banking and Trust Co., 335 Ga. App. 292 (Ga. App. 2015) (imposing sanctions sua sponte for frivolous appeal); Yow v. Jack Cooper Transp. Co., Inc., 2015 IL App (5th) 140006, 43 N.E.3d 1144 (Ill App. 2015) (affirming sua sponte sanctions award).

Haase v. Abraham, Watkins, Nichols, Sorrels, Agosto & Friend, L.L.P., 2016 Tex. App. LEXIS 7530 (Tex. App. 2016) is a recent legal malpractice claim arising out of imposition of sanctions on party in underlying action.

Bartronics, Inc. v. Power-One, Inc., 245 F.R.D. 532 (2007)

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245 F.R.D. 532United States District Court,

S.D. Alabama,Northern Division.

BARTRONICS, INC., Plaintiff,v.

POWER–ONE, INC., et al., Defendants.

Civil Action No. 06–0825–WS–M.|

June 15, 2007.

SynopsisBackground: Assignee of patent related to powerconversion system filed action for infringement.Defendants filed motion for leave to amend answer andcounterclaim.

Holdings: The District Court, Steele, J., held that:

[1] proposed amended answer and counterclaim wassufficiently detailed both to plead all elements ofan inequitable conduct claim and to comport withthe particularity requirements for pleading fraud-basedclaims;

[2] defendants would not be granted leave to amendtheir answer and counterclaim to add proposed invaliditycounterclaims; and

[3] assignee's request for Rule 11 sanctions ran afoul ofrequirement that a motion for sanctions must be madeseparately from other motions or requests.

Motion to amend granted in part and denied in part;motion for sanctions denied.

Attorneys and Law Firms

*533 Jeff Edward Schwartz, Washington, DC, forPlaintiff.

Larry Wayne Brantley, Huntsville, AL, Mark J.Patterson, Waddey & Patterson, P.C., Nashville, TN, forDefendants.

Woodford W. Dinning, Jr., Lloyd & Dinning, L.L.C.,Demopolis, AL.

ORDER

STEELE, District Judge.

This matter comes before the Court on Defendants'Motion for Leave to Amend Answer and Counterclaim(doc. 38) and Defendants' Motion to Strike Plaintiff'sOpposition (doc. 50). Both motions are ripe fordisposition at this time.

I. Background.Plaintiff Bartronics, Inc. brought this action againstdefendants Power–One, Inc. and Magnetek, Inc., alleginga claim for patent infringement with respect to a patentas to which Bartronics purports to be the assignee.Defendants filed an Answer and Counterclaim (doc. 6),in which they set forth as affirmative defenses that oneor more claims of the ′057 patent are invalid under35 U.S.C. § 102 and that plaintiff's inequitable conductduring prosecution of that patent rendered its patentunenforceable. On April 2, 2007, Magistrate Judge Millingentered a Rule 16(b) Scheduling Order (doc. 16) that, interalia, set a deadline of May 18, 2007 for motions for leaveto amend the pleadings.

On the May 18 deadline, defendants filed a Motion forLeave to Amend Answer and *534 Counterclaim (doc.38), wherein they requested leave to plead additional factsin support of the inequitable conduct defense and to statenew defenses of obviousness under 35 U.S.C. § 103 and

claim indefiniteness under 35 U.S.C. § 112. 1 Examinationof the proposed Amended Answer and Counterclaimappended to the Motion reflects that the sum total of theproposed amendment calls for adding the following todefendants' existing pleading: (a) allegations that plaintiffand/or Stuart Barron, with deceptive intent, failed todisclose specific information material to patentability tothe United States Patent and Trademark Office (“PTO”),including their knowledge of certain inventive activities byJohann Kolar and their knowledge of certain informationcontained in a technical article published in 2000, allof which is intended to bolster defendants' existinginequitable conduct affirmative defense/counterclaim; (b)a one-sentence allegation (set forth in both the Answer and

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the Counterclaim) that one or more of the patent's claimsare invalid under § 103; and (c) a one-sentence allegation(set forth in both the Answer and the Counterclaim) thatone or more of the patent's claims are invalid as beingindefinite under § 112.

In its Opposition (doc. 47), plaintiff (i) objects to theamendment of the already existing inequitable conductdefense and counterclaim on the grounds that it failsto plead fraud with particularity, (ii) argues that the §103 and § 112 counterclaims fail to satisfy minimumpleading standards, and (iii) requests imposition ofRule 11 sanctions against defendants for filing theirproposed amendment. Defendants countered by filing aMotion to Strike Plaintiff's Opposition (doc. 50) as beingprocedurally improper and relying on facts outside therecord. The Court will take all of these matters undersubmission at this time.

II. Analysis.

A. Legal Standard for Motion to Amend.[1] Defendants' timely request to amend their

Answer and Counterclaim is governed by Rule 15(a),Fed.R.Civ.P., which provides that leave to amendpleadings “shall be freely given when justice so requires.”Id.; see also Spanish Broadcasting System of Fla., Inc. v.Clear Channel Communications, Inc., 376 F.3d 1065, 1077(11th Cir.2004) (“leave to amend must be granted absenta specific, significant reason for denial”). The EleventhCircuit has explained that such leave should be “freelygiven,” as required by the rule, except in the presenceof countervailing factors such as “undue delay, bad faithor dilatory motive on the part of the movant, repeatedfailure to cure deficiencies by amendments previouslyallowed, undue prejudice to the opposing party by virtueof allowance of the amendment, futility of amendment,etc.” McKinley v. Kaplan, 177 F.3d 1253, 1258 (11thCir.1999) (quoting Foman v. Davis, 371 U.S. 178, 182, 83S.Ct. 227, 9 L.Ed.2d 222 (1962)); see also Carruthers v.BSA Advertising, Inc., 357 F.3d 1213, 1218 (11th Cir.2004)(explaining that despite “freely given” language of Rule15(a), leave to amend may be denied on such groundsas undue delay, undue prejudice, and futility). Althoughwhether to grant leave to amend rests in the district court'sdiscretion, Rule 15(a) “severely restricts” that discretion.Sibley v. Lando, 437 F.3d 1067, 1073 (11th Cir.2005).Indeed, denying leave to amend is an abuse of discretion

in the absence of a showing of one or more of the Foman

factors. 2

*535 [2] [3] [4] Plaintiff's objections to the proposedamendment allege neither prejudice nor delay, but ratherproceed exclusively on a futility theory. Unquestionably,leave to amend a pleading may properly be denied underRule 15(a) “when such amendment would be futile.”Hall v. United Ins. Co. of America, 367 F.3d 1255,1263 (11th Cir.2004). Cases in this Circuit applying thefutility test to a new defense in a proposed amendedanswer are few and far between; therefore, the Courtderives guidance from analogous authorities relating toamended complaints. See Arista Records, Inc. v. FleaWorld, Inc., 356 F.Supp.2d 411, 419 (D.N.J.2005) (“Thesame standard applies to motions for leave to amend bothcomplaints and answers.”). “When a district court deniesthe plaintiff leave to amend a complaint due to futility, thecourt is making the legal conclusion that the complaint,as amended, would necessarily fail.” St. Charles Foods,Inc. v. America's Favorite Chicken Co., 198 F.3d 815,822–23 (11th Cir.1999). Translating that standard tothe amended answer context, a finding of futility is, ineffect, a legal conclusion that the proposed defense wouldnecessarily fail. See Miller v. Rykoff–Sexton, Inc., 845F.2d 209, 214 (9th Cir.1988) ( “a proposed amendmentis futile only if no set of facts can be proved underthe amendment to the pleadings that would constitute avalid and sufficient claim or defense”); Massie v. Boardof Trustees, Haywood Community College, 357 F.Supp.2d878, 884 (W.D.N.C.2005) (motion to amend answer tostate new affirmative defense should be denied as futileonly if proposed amendment is “clearly insufficient orfrivolous on its face”).

B. Amendment Concerning Inequitable Conduct.Bartronics argues that the proposed amendmentconcerning an affirmative defense and counterclaim ofinequitable conduct is futile because it fails to plead fraudwith particularity.

As an initial matter, the timing of plaintiff's objection tothe inequitable conduct allegations is suspect. Defendantsdo not seek to interject new counterclaims and affirmativedefenses of inequitable conduct; to the contrary, theiraffirmative defense and counterclaim of inequitableconduct is unambiguously set forth in their Answer andCounterclaim (doc. 6) filed back on January 30, 2007.

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Plaintiff failed to file a motion to dismiss objecting tothe adequacy of defendants' pleading of the inequitableconduct issue at that time, but instead filed a Reply(doc. 9) to the Counterclaim that mentioned Rule 9without squarely presenting that issue to the Court.This litigation has thus proceeded for more than fourmonths with no attempt by Bartronics to contest whetherdefendants' inequitable conduct allegations satisfy Rule9(b). Paradoxically, it is only now, when defendants seekto amplify and expound on their existing inequitableconduct claims, that plaintiff would litigate its Rule 9(b)objection on the grounds that the proposed amendment-not the original Answer and Counterclaim—flunks therequirement that fraud be pleaded with particularity.

[5] Setting aside the awkward timing of plaintiff'sobjection, the law is clear that “[a] defense basedon a patentee's inequitable conduct is subject to theenhanced pleading requirements of Fed.R.Civ.P. 9(b),which requires that a party claiming fraud must pleadits claim with particularity.” Rhone–Poulenc Agro S.A. v.Monsanto Co., 73 F.Supp.2d 537, 538 (M.D.N.C.1999);see also EBS Dealing Resources, Inc. v. IntercontinentalExchange, Inc., 379 F.Supp.2d 521, 532 (S.D.N.Y.2005)(fraud-based affirmative defenses in patent cases mustbe pled in accordance with Rule 9(b) particularityrequirements); MedImmune, Inc. v. Centocor, Inc., 271F.Supp.2d 762, 772 (D.Md.2003) (“Courts generally holdthat allegations of inequitable conduct are subject tothe particularity requirements of Rule 9(b).”); Enzo LifeSciences, Inc. v. Digene Corp., 270 F.Supp.2d 484, 487–88 (D.Del.2003) (collecting cases for proposition thatmajority of federal courts have applied Rule 9(b) toinequitable conduct claims in patent cases).

There is also ample precedent documenting the elementsof an inequitable conduct claim in a patent case,which include a showing that “(1) the applicant or onesubstantially involved in the prosecution of the patentomitted or misrepresented material prior art *536 orinformation; (2) that such person knew of the materialityof the prior art; and (3) that person intended to deceivethe PTO by deliberately withholding the prior art orinformation.” MercExchange, LLC v. eBay, Inc., 271F.Supp.2d 784, 788 (E.D.Va.2002) (citation omitted);see also Enzo Life Sciences, 270 F.Supp.2d at 489 (toestablish inequitable conduct due to failure to disclosematerial information to PTO, party must prove thatinformation is material, that knowledge of information

and its materiality is chargeable to patent applicant,and that applicant's failure to disclose such informationresulted from intent to mislead the PTO).

[6] Notwithstanding Bartronics' objection, the proposedAmended Answer and Counterclaim adequately pleadsall of the elements of an inequitable conduct claim.Defendants' proposed amendment specifically pleads theidentities of the parties (including listing an individual,Stuart Barron, by name) who allegedly engaged indeceptive conduct, specifically identifies the prior artor information that defendants contend was omitted ormisrepresented in prosecution of the patent (includingthe inventive activities of Johann Kolar and the 2000technical article), specifically alleges that such prior art orinformation was both material and known to the personswho made the omission, and specifically asserts that these

omissions were made with the intent to mislead the PTO. 3

Such a pleading is, on its face, sufficiently detailed bothto plead all the elements of an inequitable conduct claimand to comport with the strictures of Rule 9(b). SeeCollaboration Properties, Inc. v. Tandberg ASA, 2007 WL205065, *4 (N.D.Cal. Jan. 25, 2007) (to allege inequitableconduct, defendant must specifically plead “(1) intent todeceive, (2) materiality, and (3) the misrepresentation's

relationship to the targeted patent or patents”). 4 Otherdistrict courts considering the sufficiency of similarpleadings of inequitable conduct have reached thesame conclusion. See MercExchange, 271 F.Supp.2d at788 (amendment properly pleaded inequitable conductdefense by alleging that prior art known to plaintiffwas not provided to PTO in connection with plaintiff'spatent application, that this prior art was material toprosecution of patent application, and that plaintiff knewthe materiality of the prior art, but deliberately decidednot to reveal it); MedImmune, 271 F.Supp.2d at 772(inequitable conduct claim passes muster under Rule 9(b)where party pleaded that inequitable conduct occurredduring prosecution before the PTO, identified the patentapplicants as persons who engaged in such conduct,enumerated the specific prior art that was misrepresentedor omitted, and alleged both that the omission wasmaterial and that it was done with intent to deceive);Rhone–Poulenc Agro, 73 F.Supp.2d at 538 (affirmativedefense of inequitable conduct satisfied Rule 9(b) where italleged that plaintiff omitted *537 material informationin patent applications and where it delineated the specificprior art and testing information that it contended shouldhave been included in the applications).

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[7] More generally, the Court recognizes “that thepurpose behind requiring such particularity is to providea defendant fair notice of the substance of a plaintiff'sclaim so that the defendant can formulate a defense.”MedImmune, 271 F.Supp.2d at 772. There can be noreasonable debate of the proposition that defendants'inequitable conduct claim and affirmative defense areadequately pleaded to afford Bartronics fair notice of theirsubstance to enable it to litigate them effectively.

For all of these reasons, plaintiff's objection to theproposed amendment is overruled insofar as it ispredicated on an alleged failure to plead fraud withparticularity.

C. Amendment ConcerningObviousness and Indefiniteness.

Plaintiff further objects to defendants' proposed AmendedAnswer and Counterclaim on the grounds that the § 103(obviousness) and § 112 (indefiniteness) claims set forthin paragraphs 5 and 6 of the proposed Counterclaim arefutile because they fail to satisfy the pleading standardadopted by the Supreme Court's recent decision in BellAtlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955,167 L.Ed.2d 929 (2007), which articulated a generalpleading requirement of plausibility, demanding “enoughfacts to state a claim to relief that is plausible on its face.”Id. at 1974. The Bell Atlantic Court reiterated the well-established propositions that “a plaintiff's obligation toprovide the ‘grounds' of his ‘entitle[ment] to relief’ requiresmore than labels and conclusions,” and that “[f]actualallegations must be enough to raise a right to relief abovethe speculative level.” Id. at 1964–65.

[8] Review of the proposed Amended Answer andCounterclaim reveals that defendants apparently intendto pursue two new counterclaims, which are pleaded intheir entirety as follows: “One or more of the claimsof the ′057 patent are invalid under 35 U.S.C. § 103”and “One or more of the claims of the ′ 057 areinvalid as being indefinite under 35 U.S.C. § 112, secondparagraph.” (Proposed Answer and Counterclaim, at 4.)The exact nature and scope of defendants' causes ofaction in the proposed Counterclaim is difficult to discernbecause of the ambiguity of the pleading, but it appearsthat defendants are attempting to bring new counterclaimsagainst Bartronics under both § 103 and § 112. Such causesof action are pleaded in entirely conclusory fashion, with

no supporting facts of any kind. As such, they run afoul ofthe pleading standards enunciated by the Supreme Courtin Bell Atlantic and cannot survive Rule 12(b) scrutiny, intheir present form.

Accordingly, the Court finds that plaintiff's objection tothe proposed amendment is sustained as to paragraphs5 and 6 of the proposed Counterclaim, which purportsto assert new causes of action against Bartronics inentirely conclusory fashion, without any accompanyingfactual allegations that might state a claim to relief that is

plausible on its face. 5

D. Plaintiff's Request for Rule 11 Sanctions.Buried in plaintiff's Opposition Brief is an accusation thatthe proposed amendment violates Rule 11, Fed.R.Civ.P.,because defendants' counsel have failed properly toinvestigate their proposed new allegations and lack anyreasonable basis for alleging that Bartronics knew of andintentionally failed to disclose the 2000 technical articleduring the patent application process.

*538 [9] By the Court's reckoning, there are atleast three prominent defects in plaintiff's request forimposition of Rule 11 sanctions. First, plaintiff has notfiled a motion or formal request for Rule 11 sanctions,but has simply folded it into a memorandum of law on astraightforward Rule 15 issue. As such, plaintiff's requestunquestionably runs afoul of Rule 11(c)(1)(A), whichprovides that “A motion for sanctions under this ruleshall be made separately from other motions or requests.”Id. (emphasis added). Second, plaintiff has ignored theclear directive in Rule 11 that motions for sanctions“shall be served as provided in Rule 5, but shall not befiled with or presented to the court unless, within 21 daysafter service of the motion, the challenged paper ... isnot withdrawn or appropriately corrected.” Id. (emphasisadded). Bartronics failed to comply with the unambiguousrequirement of advance service and 21–days notice before

filing said request with the Court. 6 Third, plaintiff doesnot offer any evidence from which it can be concluded thatdefendants failed to conduct reasonable investigation.Certainly, nothing in the exhibit appended to plaintiff'sOpposition supports a conclusion that defendants failedreasonably to investigate before alleging that Bartronicsknew of and intentionally failed to disclose the 2000technical article. At most, such correspondence reflectsthat defendants' counsel declined to reveal the factual

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basis for that knowledge allegation (which need onlybe pleaded generally under the Federal Rules of CivilProcedure, in any event) in response to plaintiff's truculentdemand for same. Nothing in Rule 11 requires a party toreveal the full scope of its investigative efforts to opposingcounsel simply because opposing counsel threatens to filea Rule 11 motion.

[10] [11] The Eleventh Circuit has admonished litigantsthat courts “look with disfavor on a party's use of Rule11 or the ethical rules as combative tools. The rulesgoverning the ethical conduct of lawyers are far tooimportant to be trivialized and used in baseless mud-slinging such as this.” Autrey v. United States, 889 F.2d973, 986 n. 20 (11th Cir.1989). Unfortunately, plaintiff'shastiness to hurl Rule 11 accusations against opposingcounsel suggests that it is engaging in precisely the sortof behavior condemned in Autrey. Rule 11 is not aweapon for intimidating or browbeating opposing counselto refrain from filing a pleading that a lawyer disagreeswith. It is not a bargaining chip to be flashed cavalierly inhopes of securing a strategic advantage. Rather, Rule 11is a narrowly cabined provision whose sanctions “are tobe imposed sparingly, as they can have significant impactbeyond the merits of the individual case and can affectthe reputation and creativity of counsel.” Hartmarx Corp.v. Abboud, 326 F.3d 862, 867 (7th Cir.2003) (citationomitted). Plaintiff's speculation that defense counsel mayhave performed insufficient investigation before allegingBartronics' knowledge and intentional omission of a 2000technical article from the patent application is far from thestuff of a Rule 11 violation. This Court expects counselappearing before it to exercise greater restraint beforeleaping to reckless accusations of sanctionable misconductby their counterparts.

Plaintiff's ill-conceived request for Rule 11 reliefembedded in its Opposition Brief (doc. 47) is denied. No

attorney's fees or expenses shall be taxed against either sidein connection with the request. Having denied the request,the Court perceives no conceivable reason for strikingsame from the court file; therefore, Defendants' Motion to

Strike Plaintiff's Opposition (doc. 50) is also denied. 7

III. Conclusion.For all of the foregoing reasons, it is hereby ordered asfollows:

*539 1. Defendants' Motion for Leave to AmendAnswer and Counterclaim (doc. 38) is granted inpart, and denied in part. The Motion is denied asfutile to the extent that defendants would add twonew conclusory claims for relief in Paragraphs 5 and6 of the proposed amended Counterclaim. In allother respects, the Motion is granted. Pursuant toSection II.A.6. of this District Court's AdministrativeProcedures for Filing, Signing and VerifyingDocuments by Electronic Means, defendants areordered, on or before June 22, 2007, to file theirAmended Answer and Counterclaim in the form ofthe proposed pleading appended to their Motion asExhibit 1, but deleting paragraphs 5 and 6 of theCounterclaim section of Exhibit 1 and renumbering

the other paragraphs accordingly. 8

2. Plaintiff's request for Rule 11 sanctions set forth in itsOpposition (doc. 47) is denied, no attorney's fees orexpenses to be awarded to either side.

3. Defendants' Motion to Strike Plaintiff'sOpposition (doc. 50) is denied.

All Citations

245 F.R.D. 532

Footnotes1 Apparently, defendants would posture the obviousness and claim

indefiniteness arguments both as affirmative defenses to Bartronics' causeof action for patent infringement and as counterclaims against Bartronics.Indeed, these allegations are replicated in both the Answer and theCounterclaim portions of the proposed pleading.

2 See, e.g., Bryant v. Dupree, 252 F.3d 1161, 1163–64 (11th Cir.2001) (lowercourt should have permitted amendment to complaint where there was noevidence of prejudice or undue delay); McKinley, 177 F.3d at 1258 (opiningthat district court abused discretion in refusing to permit amendment where

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opposing party would not be prejudiced); Florida Evergreen Foliage v. E.I.DuPont De Nemours and Co., 470 F.3d 1036, 1041 (11th Cir.2006) (“Unless asubstantial reason exists to deny leave to amend, the discretion of the DistrictCourt is not broad enough to permit denial”) (citation omitted).

3 Bartronics argues that the Rule 9(b) pleading requirements cannot be satisfiedunless defendants specifically plead a factual basis for their assertions thatBartronics had actual knowledge of this information and that Bartronics haddeceptive intent. (Opposition, at 3–4.) But plaintiff cites no authority, and theCourt is aware of none, that would require defendants to enumerate a fullevidentiary showing of the basis for their knowledge and deceptive intentallegations as a condition precedent to pleading an inequitable conduct claim.Such a draconian obstacle would foreclose the vast majority of inequitableconduct claims. It would also contravene Rule 9(b) itself, which states that“Malice, intent, knowledge, and other condition of mind of a person maybe averred generally.” Id. (emphasis added); see also MedImmune, 271F.Supp.2d at 772 (“Rule 9(b) allows intent to deceive to be averred generally”).Thus, plaintiff's position is predicated on a construction of Rule 9(b) that isout of step with, and indeed unequivocally refuted by, the plain language ofthe Rule. While Bartronics is correct that defendants must prove knowledgeand intent at trial in order to prevail on this theory of relief, they are under noobligation to make such an onerous showing at the pleadings stage. Plaintiff'sargument confuses these very distinct burdens.

4 In the inequitable conduct context, it has been observed that Rule 9(b)requires the defendant to “outline the specific statements made, the defendantwho made them, and the time and place they were made.” EBS Dealing,379 F.Supp.2d at 532. All of these prerequisites are satisfied here. Thespecific statements allegedly omitted were those concerning Kolar's inventiveactivities and the 2000 technical article. The persons who allegedly omittedsuch statements were Bartronics and/or Stuart Barron. The time and placeof the alleged omissions were the patent prosecution proceedings before thePTO. Rule 9(b) requires nothing more.

5 To be clear, plaintiff does not object to the newly-added formulation of the §103 and § 112 issues as the Third and Fourth Affirmative Defenses of theproposed Amended Answer and Counterclaim. Nothing in Bell Atlantic wouldappear to require more detailed pleading of affirmative defenses, and theCourt finds nothing inadequate or unsatisfactory in said pleading. Accordingly,nothing herein in any way forecloses, limits or impinges upon defendants'ability to file an Amended Answer and Counterclaim setting forth the new Thirdand Fourth Affirmative Defenses in the form proposed by defendants.

6 In this regard, defendants have filed the Declaration of Mark Patterson (doc.51), one of defendants' lawyers, specifically averring that “Plaintiff has notserved on Defendants a Motion for Sanctions under Rule 11.” (PattersonDecl., ¶ 7.)

7 In the overwhelming majority of cases, the proper judicial response to afactually unsupported or legally defective argument is simply not to credit it.There is no apparent reason under the circumstances presented here whythe extraordinary measure of striking plaintiff's brief might be appropriate. Seegenerally English v. CSA Equipment Co., 2006 WL 2456030, *2 (S.D.Ala.Aug. 22, 2006) (explaining circumstances under which striking a submissionmay be appropriate, and declaring that a brief should not be stricken simplybecause its arguments are incorrect, misguided or unpersuasive).

8 This directive requires clarification because the proposed Counterclaimconfusingly includes two paragraphs numbered 5. Defendants need not

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redact the first paragraph 5 (relating to the inequitable conduct claim), butmust excise the second paragraph 5 (which asserts defendants' § 103 claim),as well as the lone paragraph numbered 6.

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In re Marriage of Wixom and Wixom, 182 Wash.App. 881 (2014)

332 P.3d 1063

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182 Wash.App. 881Court of Appeals of Washington,

Division 3.

In re the MARRIAGE OF RichardTodd WIXOM, Appellant,

andLinda Buchholz WIXOM, Respondent.

No. 30851–1–III.|

Aug. 12, 2014.

SynopsisBackground: In proceedings to modify parenting plan, theSpokane Superior Court, James M. Triplet, J., enteredjudgment ordering former husband and his attorney topay attorney fees as sanction for attorney's abuse ofhis professional responsibilities. Former husband and hisattorney appealed.

Holdings: The Court of Appeals, Fearing, J., held that:

[1] attorney's conduct on appeal violated professionalrule prohibiting a lawyer from representing a client if aconcurrent conflict of interest exists;

[2] client could not waive the conflict of interest;

[3] as a matter of first impression, the Court of Appeals,on its own initiative, could remove attorney fromrepresenting client; and

[4] attorney would not be disqualified from representinghimself unless he wished to argue sanctions should only beimposed upon the client.

Attorney disqualified.

Attorneys and Law Firms

**1065 Robert E. Caruso, Attorney at Law, Spokane,WA, for Appellant.

Nichole Swennumson, Law Office of Paul B. Mack,Kenneth H. Kato, Attorney at Law, Spokane, WA, forRespondent.

Opinion

FEARING, J.

*884 ¶ 1 As the noblest calling, the legal professiondemands the highest ethical behavior of its members. Asupreme commandment of attorney ethics is undividedloyalty to a client and the shunning of any self-interestthat would conflict with the interests of the client. Becauseappellant's counsel violates this commandment, *885 wetake the unusual step of disqualifying him, on our owninitiative, from representing appellant.

¶ 2 The trial court ruled that Richard (Rick) Wixomand Robert Caruso, his attorney, violated CR 11 andheld them jointly liable for $55,000 in attorney feesand costs incurred by Wixom's former wife during aproceeding to modify residential placement of the couple'schildren. Both Wixom and Caruso appeal, challengingthe sanctions and contesting the findings supporting thecourt's imposition of terms. Caruso further argues that, ifthis court upholds the sanctions, his client alone shouldbear the costs. Because this creates a conflict of interest,we disqualify Caruso from further representation of RickWixom in this appeal. We also impose limits upon Carusorepresenting himself.

FACTS

¶ 3 The important facts, upon which we disqualifyattorney Robert Caruso, are brief. On appeal, Carusoforwards an argument beneficial to himself and harmfulto his client, Rick Wixom. Nevertheless, we provideadditional facts to show the background as to howCaruso arrived at forwarding this argument. In supplyingthis background, we do not seek to prejudge whethersanctions awarded by the trial court against RobertCaruso and Rick Wixom should be affirmed on appeal.Instead, we seek to show the basis upon which the trialcourt assessed sanctions against both Caruso and Wixom,thereby creating a conflict between attorney and client.Therefore, we will sometimes couch the facts in termsof the respective parties' testimony and findings of factentered by the trial court.

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332 P.3d 1063

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¶ 4 Rick and Linda Wixom wed in 1991. The couplebore two sons, A.W., age 21; and J.W., age 14; and onedaughter, T.W., age 19. Rick and Linda Wixom separatedin August 2007.

¶ 5 Linda Wixom holds a graduate degree inpharmacology and is a Washington State licensedpharmacist. From *886 April to September 2006, Lindadiverted hydrocodone and alprazolam from her placeof employment, a Rite Aid store in Spokane. Sheaccomplished the diversion by forging the name ofher physician brother to prescriptions for her husband,Rick Wixom, and by overfilling Rick's prescriptions forhydrocodone. Linda took some of the pills. In September2006, Rite Aid fired Linda from her job for stealingprescription drugs. In April 2007, the State of WashingtonDepartment of Health Board of Pharmacy (Board ofPharmacy) brought disciplinary charges against Linda.

PROCEEDINGS

¶ 6 In September 2007, Rick Wixom petitioned for divorcefrom Linda. Shortly **1066 thereafter Linda voluntarilyentered the Washington Recovery Assistance Programfor Pharmacists as part of an agreement with the Boardof Pharmacy. Linda Wixom agreed to probation forfive years with the Board of Pharmacy, and the Boarddismissed charges against her in January 2008. As part ofprobation, Linda underwent random urinalysis testing.

¶ 7 All three children resided with Linda Wixom throughOctober 2008. The oldest child, A.W., then went to livewith his father. In October 2008, Rick Wixom began todate Angel. We do not know Angel's last name before hermarriage to Rick Wixom.

¶ 8 In January 2009, the federal government indictedLinda Wixom on three counts of obtaining controlledsubstances by fraud. In February 2009, she pled guiltyand entered probation for five years. In September 2009,Linda withdrew her guilty plea, and the court acceptedthe withdrawal because she had not been advised that shecould not work as a pharmacist with the conviction. InNovember 2009, the United States and Linda entered intoa deferred prosecution agreement. Under the agreement,the government promised to dismiss charges against

Linda, if she complied with 20 conditions during the nextfive years.

*887 ¶ 9 The trial court entered a decree of dissolutionand parenting plan on March 3, 2009, at a time wheneach child was under the age of majority. Rick receivedresidential placement of A.W., and Linda receivedplacement of the other two children. During the time thathe resided with his father, A.W. hated his mother Lindabased upon his father's stories of the mother's stealing andtaking drugs.

¶ 10 In October 2009, Rick Wixom married Angel.

¶ 11 A.W., and T.W.'s respective relationships with theirfather and his new wife Angel significantly deterioratedduring 2010. The last time that T.W. and A.W saw theirfather was on December 24, 2010. A.W. moved to hismother's home after either his father evicted him, A.W. leftin anger, or both. Rick Wixom claimed that A.W. refusedto obey rules, took unlawful drugs, and threatened thesafety of Rick's new wife.

¶ 12 Because of the change in A.W.'s residential location,Linda Wixom petitioned the court, on February 8, 2011,to modify the parenting plan. In addition to seekingrecognition of A.W. residing with her, Linda, in herpetition and in recognition of T.W.'s refusal to visit withher father, sought limitation of T.W.'s visits with RickWixom.

¶ 13 On March 23, 2011, Rick counter-petitioned fora modification of the parenting plan. Rick asked thatthe couple's youngest child, J.W., be placed in his home.Rick alleged that J.W. should be away from his twoolder siblings, because of their bad influence. Rick furtheralleged that Linda could not supervise T.W. and J.W.because of Linda's untreated mental illness and continuingabuse of drugs. He claimed that Linda engaged in ongoingcriminal behavior.

¶ 14 On April 22, 2011, the trial court found adequatecause to proceed to a trial on Rick Wixom's petition formodification to gain custody of J.W. and Linda's petitionto limit visitation between T.W. and Rick. The courtappointed experienced guardian ad litem (GAL), HeatherLund, to address the parenting and home environment ofboth father *888 and mother. By the time of the April 22hearing, A.W. had reached the age of 18 and thus the court

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no longer held jurisdiction over the placement of A.W.Linda's petition for modification with regard to A.W. wasrendered moot.

¶ 15 Through July 11, 2011, attorney Connie Shieldsrepresented Rick Wixom. On July 11, Robert Carusosubstituted as counsel for Richard. The trial judgeconsidered this change in attorneys to be significant.

¶ 16 A traumatic event occurred on the evening of July29, 2011, at a time that the parties were to changecare of J.W. Rick Wixom exercised visitation with J.W.from July 23 through July 29. Linda Wixom was toretrieve J.W. from Rick's home on Friday, July 29, at5:00 p.m., but neither J.W. nor Rick was present whenshe arrived around 5:45 p.m. Linda's work ended at 5:00p.m. and she warned Rick that she may be late to retrieveJ.W. because of construction **1067 on Interstate 90.Rick blamed his failure to surrender J.W. to Linda thatFriday evening on Linda's tardiness in retrieving J.W. andLinda's “controlling,” “manipulative,” and “deceitful”behavior. In response to an emergency motion by Lindato regain the presence of J.W., Rick averred that Lindawas “impaired by the use of illegally obtained prescriptionnarcotics,” such that “she abandons the children andis only concerned about herself and what is convenientto her and her life.” Clerk's Papers (CP) at 284. AngelWixom declared that she “perceived” J.W. to “sufferfrom severe abandonment and guilt issues,” resulting fromLinda's “lack of sensitivity and failure to live up to hercommitments of time to receive (pick-up) J.W. on time.”CP at 304.

¶ 17 Guardian ad litem, Heather Lund, scheduled a homereview of Linda's home for Saturday, July 30, but neededto reschedule because Linda did not gain care of J.W. onJuly 29. Lund received a phone message from attorneyRobert Caruso, at 4:15 p.m., on July 29, stating that J.W.would not be at the home visit the following day. She didnot hear the message until Monday, August 1.

*889 ¶ 18 The trial court held Rick Wixom in contemptfor failing to return J.W. Rick then began to blamethe court for embarrassing and humiliating him. Theruling and other rulings by the trial court led to aseries of motions by Rick Wixom, including motions forreconsideration, a motion for declaratory judgment, and amotion for removal of a court commissioner from hearingfurther motions.

¶ 19 On September 8, 2011, guardian ad litem, HeatherLund, issued her report. The guardian expressed concernthat disparagement of Linda Wixom by Rick andAngel Wixom posed serious damage to all children'spsychological development. Angel and Rick Wixom calledLinda a drug addict and “bitch” in the presence of T.W.CP at 1109. The guardian ad litem found that Angel andRick Wixom routinely violated a court order directingthat J.W. have telephone contact with his mother eachevening while J.W. visited Richard.

¶ 20 In her report, Heather Lund recommended amodification of the parenting plan to limit T.W.'s contactwith her father. According to Lund, Rick Wixom'sconduct adversely affected T.W.'s best interests because ofthe absence of emotional ties between them. Lund furtherconcluded that Linda Wixom should retain custody ofJ.W., but that visitation with Rick Wixom be extendedwhile Rick was home, but curtailed if only Angel Wixomwas at home.

¶ 21 After the filing of the guardian ad litem report, RickWixom's counsel, Robert Caraso, requested that HeatherLund conduct an investigation into the criminal history ofand drug abuse by Linda Wixom, Caruso also instructedLund to have no further contact with his client.

¶ 22 Rick Wixom's and Linda Wixom's cross-petitions tomodify the parenting plan proceeded to a seven day trial,in November and December 2011. Guardian ad litem,Heather Lund, spent three trial days under questioning byboth attorneys.

¶ 23 Angel and Rick Wixom testified at trial that LindaWixom emotionally traumatizes and alienates J.W., andLinda *890 withholds love and affection from all threechildren. Heather Lund testified none of these claims weretrue.

¶ 24 During trial, the Board of Pharmacy substanceabuse recovery program manager testified. The managertestified that Linda Wixom is in full compliance of theprogram. Linda routinely undergoes random urinalysistests and always passes. Linda Wixom's federal probationofficer testified that Linda is in compliance with herprobation requirements.

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¶ 25 Before trial, Rick Wixom submitted a declaration, inwhich he stated Linda Wixom's pharmacist's license wasrevoked. In his proposed parenting plan, Rick claimedLinda was pending incarceration for violation of federalprobation. At trial, Rick admitted he did not knowwhether the license was revoked. He admitted he knew ofno violations of probation.

¶ 26 In the afternoon of the last day of trial, Rick Wixominformed the court he was **1068 no longer contestingLinda Wixom's petition to limit visitation between he andT.W.

¶ 27 After trial, the trial court entered 195 findings of fact.The findings included:

72. The Court finds there has been a long-term barrageof derogatory comments made about Linda Wixomand Bob McGuinness and about [A.W.] and [T.W.]to [J.W.] by Richard and Angel Wixom. That conflicthas been abusive and creates a danger of seriousdamage to the Wixom children's psychologicaldevelopment. It has also resulted in the substantialimpairment of the emotional ties between [T.W.]and both Richard and Angel Wixom. It representsa detriment to [J.W.'s] emotional and psychologicalwellbeing in Richard Wixom's home. The benefits ofsuspending [T.W.'s] contact outweigh the harm likelyto be caused by disrupting those visits.

73. Richard and Angel Wixom's opinions thatLinda Wixom has used or abused nonprescriptiondrugs since the time of the final parenting planare inconsistent with the overwhelming evidencepresented in this case.

*891 74. The fact that Mr. Wixom has failed to exerciseany residential time with [T.W.] and does not seekresidential time with [T.W.] as recently as the last dayof trial is compelling evidence to the Court that eitherMr. Wixom does not believe there is a detriment tothe children's environment in their mother's home, orif he does truly believe Linda Wixom's environmentis detrimental, he is willing to subject his older twochildren to that detrimental environment.

....

96. All of the other allegations by Richard and AngelWixom, either individually or cumulatively, comenowhere close to the type of detriment that is

necessary in order to establish a basis for a majormodification.

97. This case was thoroughly investigated by one ofSpokane County's most experienced Guardian adLitems. She wrote two reports that totaled over 70pages. She testified for three court days on the stand.She was not able to find any evidence of detriment inLinda Wixom's home.

....

99. There is something toxic going on in RichardWixom's home that has caused both [A.W.] and[T.W.] to flee from that environment. The Courtdoes not normally see the type of total decay of arelationship between children and their parents asexists here unless there is something unhealthy in thatenvironment.

....

104. This Court concludes the reason for the conflictdoes not lie with [T.W.] and [A.W.] but insteadwith Richard and Angel Wixom and their homeenvironment.

....

116. Richard Wixom's request for attorney fees isbased upon the following factors from the JointTrial Management Report: bad faith dealings byRespondent, judgments obtained under fraudulentpretenses, violation of U.S. and WashingtonState Constitutions due process rights, order ofcommissioner fraudulently obtained, dirty hands ofRespondent in obtaining money judgments, andRespondent's perjury and/or misstatements to theCourt as evidence of her fraud, deceptions, andsneakmess, *892 and lack of candor to the Court asa way to foster her goals at any cost.

117. Linda Wixom requests attorney fees becauseshe asserts Richard Wixom and his attorney haveengaged in a course of conduct intended to harass,cause unnecessary delay, or needlessly increase thecost of litigation by raising issues that preexistedthe Final Parenting Plan and making arguments andassertions that are not well grounded in fact orproffered in good faith.

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**1069 118. Both parties allege intransigence by theother as a basis for attorney fees.

....

122. Richard Wixom expended a great deal of trialtime on allegations that Linda Wixom committedperjury by intentionally denying she had ever beencharged or convicted of a federal crime, her failure todisclose out of state travel to her probation officer,the possibility that she may have provided fraudulenturine samples for purposes of passing UA's, the factthat she was inconsistent in her testimony aboutwhether she arrived at 5:40 pm or 5:45 pm on July 29,2011, the fact she only gave one-day notice she wouldnot make the exchange on July 29, 2011 by 5:00 pm,her alleged fraudulent testimony to the Court that aphone call on August 2nd was made at 6:00 pm andother alleged misstatements made by her or on herbehalf during previous hearings.

....

124. Linda Wixom further cites the fact that RichardWixom asserted in his joint trial management reportthat he would call 40 witnesses, forcing her toprepare for crossexamination of those witnesses.Linda Wixom filed a Motion during trial for that listto be narrowed down. Only 2 of the 40 listed witnesseswere ever called by Richard Wixom.

....

133. The Court is satisfied Linda Wixom did notintend to deceive anyone when she denied beingcharged with a crime and corrected it when she signedher deposition. *893 This Court gave Mr. Carusogreater latitude to impeach Linda Wixom as a resultof that misstatement. However, that fact could havebeen established very quickly, especially as it wasconceded before trial began. Yet it was an issuebrought up by Richard Wixom and Mr. Caruso overand over throughout the trial.

....

139. Richard Wixom and Mr. Caruso asserted aseries of other statements they considered perjurious,deceptive, or sneaky. These were exhaustivelycovered during the course of trial. Some of thesealleged statements were not even made by Linda

Wixom so they could not amount to perjury or fraudby her. The argument from Richard Wixom and Mr.Caruso is that they were made on her behalf by herattorney or by the GAL.

140. Mr. Caruso insinuated Ms. Lund was biased infavor of Linda Wixom when Ms. Lund used the word“we” when discussing a court appearance for an exparte restraining order....

141. There is absolutely no evidence to suggest Ms.Lund was biased towards or aligned with one sideduring this hearing or any other hearing.

....

155. Linda Wixom's phone records show her first call to[J.W.] on August 2, 2011, was at 5:59 pm. She thencalled Richard Wixom at 6:00 pm.

156. Richard Wixom and Mr. Caruso argue the factthat she called [J.W.] at 5:59 pm and not 6:00 pm [is]another example of Linda Wixom's fraud, deception,sneakiness, and lack of candor as a way of fosteringher goals at any cost.

157. To argue that testifying a phone call was made at6:00 pm when in fact the telephone records show thecall began at 5:59 pm is fraud is the most extremelyunreasonable position the Court has witnessed takenby any attorney in any case in its courtroom.

158. The events of July 29, 2011 represent the cleardividing point in this case. Before that time Lindaand Richard *894 Wixom were able to reasonablyresolve things regarding their children despitetheir competing petitions **1070 for modification.Linda Wixom voluntarily allowed Richard Wixomadditional summer time despite not receiving hisproposed summer schedule by May 15th. 159. Priorto July 29, 2011 there had never been a contemptproceeding nor the type of litigation that occurredafter July 31, 2011.

....

163. There is one significant event that occurredshortly before this exchange that explains the chaosand dysfunction. Shortly before July 29, 2011,Richard Wixom's previous attorney withdrew and heretained Mr. Caruso. That day, that weekend, and

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virtually every part of this case became chaotic anddysfunctional from that point forward.

164. Mr. Caruso advised Mr. Wixom that he wasrunning out of time to exercise his five weeksof summer time with [J.W.] before school started.Richard Wixom knew Linda Wixom was going to belate to pick up [J.W.] on July 29, 2011.

165. Mr. Caruso and Richard Wixom decided to takeadvantage of the fact that Linda Wixom would be lateto pick up [J.W.].

166. Richard Wixom contacted his attorney at 4:00 pmon July 29, 2011.

167. Mr. Caruso called the GAL and left a message forher at 4:15 pm on July 29, 2011, that [J.W.] wouldprobably not be at the home visit the following daybecause Mr. Caruso and Richard Wixom knew [J.W.]was not going to be delivered to Linda Wixom thatevening.

....

178. This was a calculated decision by Richard Wixomto sabotage the GAL's investigation, to keep [J.W.]for as much time as he could, and to begin engagingin a course of conduct that was intended to harassor increase the cost of this litigation. That course ofconduct continued through trial.

....

*895 180. Richard Wixom and Mr. Caruso decidedto raise every possible argument to support hismodification, including alleging drug use when theyhad no evidence to support that assertion.

....

182. This was an all-out war against Linda Wixom fromthat time through trial.

183. Richard Wixom and Mr. Caruso engaged ina course of conduct that was not in good faithbeginning in late July 2011 and continued throughtrial.

184. Richard Wixom and Mr. Caruso pursuedallegation and innuendos not well-grounded infact. Instead these allegations and innuendos wereinterposed for the improper purpose of harassing and

causing unnecessary and needless increase in the costof litigation.

185. There has been an ongoing attempt by RichardWixom and Mr. Caruso to harass, embarrass,threaten, and intimidate the GAL, the CourtCommissioner, and Linda Wixom herself.

186. In the years the Court has been a judicial officerin Spokane County and including the nearly 30 yearsthat the Court has worked around Spokane CountySuperior Court, the Court cannot recall a case sodevoid of merit and so full of misdirection andmeritless arguments.

....

188. There is a basis for Linda Wixom to receiveCR 11 sanctions and attorney's fees based uponintransigence against Richard Wixom and Mr.Caruso.

189. Richard Wixom has not seen [T.W.] sinceChristmas Eve 2010 when he returned her to LindaWixom's care early.

190. It was unconscionable for Richard Wixom towait until the afternoon of the last day of trialto disclose he was not requesting residential time**1071 with [T.W.] and that he agreed with the

GAL's recommendations. He only did this whendirectly asked by the Court.

191. Had Richard Wixom or his attorney disclosedto the Court they were not contesting LindaWixom's petition *896 to modify the parentingplan regarding [T.W.], the Court would havesimply granted Linda Wixom's petition based uponagreement of the parties.

192. Had Richard Wixom conceded Linda Wixom'spetition before the end of trial, then Mr. Carusowould have begun his case for Richard Wixom'spetition to modify first. Richard Wixom and Mr.Caruso could have used the first three trial daysdeveloping whatever evidence they might have hadto support the alleged detriment in Linda Wixom'shome.

193. Had Richard Wixom conceded Linda Wixom'spetition before the end of trial, the GAL may nothave spent three days on the stand since Richard

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Wixom likely would not have called her in his case-in-chief since he disagreed with most of her findingsand recommendations.

194. Had Richard Wixom conceded Linda Wixom'spetition before the end of trial, the Court likelywould have dismissed Richard Wixom's petition atthe conclusion of his case because the evidence hepresented, even looked at in the light most favorableto him, likely would not have risen to the levelnecessary to prevail on his petition to modify.

195. Linda Wixom spent tens of thousands of dollarsto pursue her petition that was not contested andto defend a petition filed by Richard Wixom that iswithout merit.

CP at 1112–1124.

¶ 28 Based on the foregoing findings of fact, the trial courtconcluded that Robert Caruso abused his professionalresponsibilities. The trial court ordered Rick Wixom andRobert Caruso to pay 90 percent of the attorney feesincurred by Linda Wixom after July 30, 2011. The 10percent reduction was based upon Linda's erroneoustestimony that she had not been charged with a crime.After reviewing Linda Wixom's counsel's affidavit, thetrial court awarded fees of $51,778.58 and costs of$3,949.84.

*897 ¶ 29 Robert Caruso and Rick Wixom appeal thesanctions. The notice of appeal signed by Caruso lists bothCaruso and his client as parties to the appeal.

¶ 30 In the appeal brief, Robert Caruso argues that,if this court affirms the sanctions, Rick Wixom aloneshould bear the $55,000 in attorney fees and costs. BecauseCaruso sought, at least partially, to absolve himself frompaying sanctions and, instead, requested to shift the entirecost of the sanctions to his client, this appellate courtasked Caruso to address whether he should be removedas Wixom's attorney because of a conflict in interest.In his response to this court's request, Robert Caruso,without citation to authority, argued no conflict of interestexists. If one exists, Caruso asserted, his client madean informed decision to waive that conflict on May 16,2014, after Caruso gave him time to review the briefs andseek separate counsel. Caruso did not submit any writtenwaiver or an affidavit by Rick Wixom attesting to waivingany conflict.

LAW AND ANALYSIS

[1] ¶ 31 Robert Caruso's conduct requesting that thiscourt shift any sanctions solely to his client raises a fewquestions. First, does the request create a conflict ofinterest? Second, may Rick Wixom waive the conflict ofinterest, and, if so, what evidence of waiver is required?Third, may this court, on its own initiative, remove RobertCaruso from representing Rick Wixom? Fourth, doesany conflict of interest preclude Robert Caruso fromrepresenting himself in further proceedings?

Conflict of Interest[2] ¶ 32 RPC 1.7 prohibits a lawyer from representing

a client if a concurrent conflict of interest exists. Aconcurrent conflict of interest exists if:

**1072 (1) the representation of one client will bedirectly adverse to another client; or

*898 (2) there is a significant risk that therepresentation of one or more clients will be materiallylimited by the lawyer's responsibilities to another client,a former client or a third person or by a personal interestof the lawyer.

RPC 1.7(a). A lawyer represents conflicting interestswhen, on behalf of one client, it is the lawyer's duty tocontend that which the lawyer's duty to another clientrequires him or her to oppose. In re Welfare of Schulz, 17Wash.App. 134, 142, 561 P.2d 1122 (1977).

[3] [4] ¶ 33 Rules of professional conduct should beconstrued broadly to protect the public from attorneymisconduct. Eriks v. Denver, 118 Wash.2d 451, 459,824 P.2d 1207 (1992); Gustafson v. City of Seattle, 87Wash.App. 298, 302–03, 941 P.2d 701 (1997). An attorneyshould resolve all doubts against undertaking a dualrepresentation. Eriks, 118 Wash.2d at 460, 824 P.2d 1207;Gustafson, 87 Wash.App. at 303, 941 P.2d 701.

[5] ¶ 34 Concurrent conflicts of interest can arise fromthe lawyer's own interests. RPC 1.7 cmt. 1. A conflictof interest exists when the interests of the attorney andthe client are adverse. State v. Roger I. Fualaau, 155Wash.App. 347, 362, 228 P.3d 771 (2010). “The lawyer'sinterest,” within the context of RPC 1.7, denotes a

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financial or familial interest or an interest arising from thelawyer's exposure to culpability. In Re Pers. Restraint ofStenson, 142 Wash.2d 710, 740, 16 P.3d 1 (2001).

¶ 35 Robert Caruso contends no conflict exists becausehe has but one client, Rick Wixom. The record showsotherwise. Caruso has two clients: Rick Wixom andhimself. The caption to his opening brief, reply brief, andbrief on the subject of the conflict of interest confirms this.All captions read:

Robert E. Caruso, WSBA # 29338

CARUSO LAW OFFICES

Attorneys for Appellant Richard T. Wixom and

Appellant–Judgment Debtor Robert E. Caruso.

*899 The signature page of each brief repeats Caruso'sdeclaration that he represents both Rick Wixom andhimself. Robert Caruso's argument in his opening briefalso belies his contention. In his appeal brief, he arguesthat, if this court confirms sanctions, only Rick Wixomshould bear the responsibility.

¶ 36 Rick Wixom's interests rest in Rick Wixom's sharingpayment of any sanctions. Therefore, Caruso's advocacybefore this court is directly adverse to Rick Wixom'sinterests. In violation of RPC 1.7(a)(1), Caruso takes aposition in favor of one client that injures another client.In violation of RPC 1.7(a)(2), Caruso's personal interestsconflict with the interests of his client.

¶ 37 The trial court found that the litigation intransigenceof Rick Wixom did not begin until Robert Carusoappeared on behalf of Wixom. Therefore, Wixom couldargue that Caruso was the major cause of the bad faithlitigation and he should share payment of sanctions. Wedo not expect Caruso to advise his client that the twoshould share responsibility. Independent counsel would behelpful to Rick Wixom.

¶ 38 Rick Wixom could even argue that any sanctionsshould be assessed solely upon Robert Caruso. Wixomcould argue he relied upon Caruso to advise him onlegitimate litigation tactics. Yet, Caruso is not forwardingthis argument on behalf of Wixom. Caruso's professionaljudgment may be clouded by the imposition of sanctionsagainst him, and independent judgment is essential to alawyer's representation of a client. RPC 1.7 cmt. 1.

¶ 39 If attorney and client disagree about who is atfault and point their fingers at each other in responseto a request for sanctions, the interests of the two areclearly adverse. Eastway Constr. Corp. v. City of N.Y., 637F.Supp. 558, 570 (E.D.N.Y.1986). The client, therefore,will need new counsel to represent him against his formercounsel in the proceedings to determine fault. EastwayConstr. Corp., 637 F.Supp. at 570 (citing William W.Schwarzer, *900 Sanctions Under the New Federal Rule11, 104 F.R.D. 181, 199 (1985)). Rick Wixom may not bepointing the finger at Robert Caruso because, not beingschooled in the law, Wixom does not **1073 know topoint the finger. But Caruso is pointing the finger atWixom.

¶ 40 Another problem arises because of this appeal. Thiscourt could find the appeal frivolous and impose sanctionsin favor of Linda Wixom. This court would then need todecide whether to impose sanctions upon Robert Caruso,Rick Wixom, or both. Wixom may have authorized anappeal only because Robert Caruso expressed an opinionthat legitimate grounds existed for the appeal. Caruso'scontinued representation of Wixom could prevent Wixomfrom arguing that Caruso should be the principal, if notthe sole, party upon whom we might impose sanctions onappeal.

¶ 41 Several cases are illustrative. In Slane v. RioGrande Water Conservation District, 115 F.R.D. 61(D.Colo.1987), the defendant conservation district, afterdismissal of plaintiffs' suit, filed a motion for attorneyfees against plaintiffs and their counsel for filing afrivolous suit. The court agreed the suit was frivolous,and, before awarding an amount, the court recommendedthat plaintiffs' counsel withdraw from his representationof the plaintiffs and that he obtain counsel for himself.Counsel withdrew from representation of the plaintiffsand obtained his own counsel. Eventually, the trial courtimposed all sanctions upon counsel based upon evidencethat the clients relied on their attorney in determiningwhether they had a basis for suit.

¶ 42 In Anschutz Petroleum Marketing Corporation v.E.W. Saybolt & Co., Inc., 112 F.R.D. 355 (S.D.N.Y.1986),the court granted plaintiff's motion to strike defendants'third-party complaint and granted plaintiff's motion forsanctions under Federal Rules of Civil Procedure Rule(FRCP) 11, The court imposed sanctions only upon

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defendants' counsel. The court further noted that, ifcounsel wished to shift some of the sanctions upon hisclients, the client must be represented by separate counsel.

[6] *901 ¶ 43 Robert Caruso contends that any potentialconflict of interest may not materialize because (1) LindaWixom may choose not to enforce the judgment againsthim, (2) this appellate court may agree that the trial courterred when it awarded any sanctions, or (3) he will be heldliable anyway. Each argument is speculative. No principleof law excuses an attorney from a conflict with a clientbecause a court may later issue a ruling that renders theconflict moot. Furthermore, Robert Caruso's speculationdoes not consider the possibility that sanctions shouldonly be imposed upon him and he fails to advocate thispossibility on behalf of his client, Rick Wixom.

¶ 44 We recognize that a potential for conflict is inherent inany sanctions motion that is directed against both a clientand a lawyer. See, e.g., Healey v. Chelsea Resources, Ltd.,947 F.2d 611, 623 (2nd Cir.1991); In re Ruben, 825 F.2d977, 985 (6th Cir.1987). We do not imply that an attorneymust withdraw each time the opposing party targets asanction motion against both him or her and the client,otherwise such sanction motions could be used as a tacticto harass the opposing party and lawyer. We hold that,if and when an attorney seeks to limit a sanction awardagainst only his or her client, the attorney must withdrawfrom representing the client.

Waiver[7] ¶ 45 Robert Caruso contends that Rick Wixom

waived any potential conflict of interest. RPC 1.7(b)allows the client to waive a conflict of interest in limitedcircumstances. The rule reads:

(b) Notwithstanding the existence of a concurrentconflict of interest under paragraph (a), a lawyer mayrepresent a client if:

(1) the lawyer reasonably believes that the lawyer will beable to provide competent and diligent representationto each affected client;

(2) the representation is not prohibited by law;

*902 (3) the representation does not involve theassertion of a claim by one client against another clientrepresented by the lawyer in the same litigation or otherproceeding before a tribunal; and

(4) each affected client gives informed consent,confirmed in writing (following authorization from theother client to make any required disclosures).

**1074 ¶ 46 Robert Caruso contends Rick Wixomwaived any conflict on May 16, 2014. Caruso produces nowritten waiver. We do not know if Caruso fully disclosedthe ramifications of his adverse arguments to Wixom,before Wixom consented. We do not know if RobertCaruso discussed, with Rick Wixom, the possibility thatCaruso alone might be held responsible or principallyresponsible for the sanctions. Regardless, we hold thatWixom may not waive the conflict, because an actualconflict has now arisen in litigation.

[8] [9] ¶ 47 Some conflicts are nonconsentable, meaningthat the lawyer cannot properly ask for a waiver or providerepresentation on the basis of the client's consent. RPC1.7 cmt. 14. RPC 1.7(b)(3) prohibits representation ofopposing parties in the same litigation, regardless of theclients' consent. RPC 1.7 cmt. 23. It is axiomatic that anattorney cannot represent two clients whose interests areactually, as opposed to potentially, conflicting. U.S. Fid.& Guar. Co. v. Louis A. Roser Co., Inc., 585 F.2d 932, 939(8th Cir.1978). If a lawyer accepts dual representation andthe client's interests thereafter come into actual conflict,the lawyer must withdraw. In re Disciplinary ProceedingAgainst Carpenter, 160 Wash.2d 16, 28, 155 P.3d 937(2007).

¶ 48 As described above, Robert Caruso represents RickWixom and himself before this court. Caruso assertsWixom alone should bear the costs of any sanctions thiscourt upholds. Caruso's assertion is active and directlyadverse to the interests of Wixom. Caruso's personalinterests and the alternative appeal strategy demonstratehis and his client's interests actually conflict. Therefore,Rick Wixom may not waive this conflict.

[10] [11] *903 ¶ 49 Even if Rick Wixom could consentto the conflict, Robert Caruso should have obtained theconsent prior to arguing in his brief that Wixom shouldbe the only person to pay sanctions. Eriks, 118 Wash.2dat 461, 824 P.2d 1207. By Caruso's own admission, hedid not obtain Wixom's consent until May 16, 2014,long after the conflict arose, and only after this courtraised the issue of disqualification. No waiver may befound if the waiver was not obtained until after theadverse representation was made, rather than prior to

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commencement of the adverse representation. Andersonv. Nassau County Dep't of Corr., 376 F.Supp.2d 294,300 (E.D.N.Y.2005); Stratagem Dev. Corp. v. Heron Int'l,N.V., 756 F.Supp. 789, 794 (S.D.N.Y.1991). Consentmust be obtained prior to the attorney's undertakingrepresentation of adverse interests, not in response to amotion to disqualify. Discotrade Ltd. v. Wyeth–AyerstInt'l, Inc., 200 F.Supp.2d 355, 360 (S.D.N.Y.2002). Priorconsent is important because the client may deem himselfwithout options once the conflict arises and the attorneymay not fully explain the ramifications of the conflictbecause of personal interests.

[12] ¶ 50 Even if a client waives the conflict, a waiver ofa conflict of interest does not necessarily cure a conflictand the court need not necessarily accept the waiver.Wheat v. United States, 486 U.S. 153, 162, 108 S.Ct. 1692,100 L.Ed.2d 140 (1988); State v. Rooks, 130 Wash.App.787, 799, 125 P.3d 192 (2005). Under such circumstances,the court can elect to exercise its supervisory authorityover members of the bar to enforce the ethical standardrequiring an attorney to decline multiple representations.Wheat, 486 U.S. at 162, 108 S.Ct. 1692; United Statesv. Dolan, 570 F.2d 1177, 1184 (3d Cir.1978); Rooks, 130Wash.App. at 800, 125 P.3d 192.

Disqualification¶ 51 RPC 1.16 requires withdrawal if the representationwill result in violation of the Rules of ProfessionalConduct or other law. Rooks, 130 Wash.App. at 798, 125P.3d 192. The rule reads, in part:

*904 DECLINING OR TERMINATINGREPRESENTATION

(a) Except as stated in paragraph (c), a lawyer shallnot represent a client or, where representation hascommenced, shall, notwithstanding RCW 2.44.040,withdraw from the representation of a client if:

(1) the representation will result in violation of the Rulesof Professional Conduct or other law.

“The rule is clear, ‘[i]f a lawyer accepts dual representationand the client's interests **1075 thereafter come intoactual conflict, the lawyer must withdraw.’ ” In reDisciplinary Proceeding Against Carpenter, 160 Wash.2dat 28, 155 P.3d 937 (quoting Eriks, 118 Wash.2d at 459,824 P.2d 1207).

[13] ¶ 52 Robert Caruso refuses to withdraw. NoWashington decision entails a court disqualifying counselon its own initiative. Based upon general principles ofattorney ethics and decisions from other jurisdictions, wehold we possess authority to disqualify an attorney, whoserepresentation of a client poses an actual conflict withhimself or another client.

[14] [15] [16] ¶ 53 The court need not wait for oneof the parties to raise the conflict or move to disqualify.A court has the authority and duty to inquire on itsown initiative into whether counsel should not servebecause of a conflict with another client. United Statesv. Coleman, 997 F.2d 1101, 1104 (5th Cir.1993); Estateof Andrews by Andrews v. United States, 804 F.Supp.820, 824 (E.D.Va.1992); In re Chou–Chen Chems., Inc.,31 B.R. 842, 852 (Bankr.W.D.Ky.1983). In cases wherecounsel is in violation of professional ethics, the courtmay act sua sponte to disqualify. O'Connor v. Jones, 946F.2d 1395, 1399 (8th Cir.1991). A court has not only theright, but also the duty to safeguard ethical practice aspart of its inherent power to supervise its own affairs. Inre Mt. Vernon Plaza Cmty. Urban Redevelopment Corp.I, 85 B.R. 762, 765 (Bankr.S.D.Ohio 1988). In Yates v.Applied Performance Technologies, Inc., 209 F.R.D. 143,152, 154 (S.D.Ohio 2002) and *905 Cramer v. Chiles, 33F.Supp.2d 1342, 1346 n. 2 (S.D.Fla.1999), courts on theirown initiative disqualified counsel for a conflict of interest.

[17] ¶ 54 We recognize that the authority, upon whichwe rely, comes from federal courts, but see no reasonto distinguish between a state court and a federal courtfor purposes of enforcing ethical standards. Also, severalWashington decisions imply that a court has inherentauthority to disqualify an attorney. The trial court hasa duty to inquire into a potential conflict of interestonly if there are special circumstances such that the trialcourt knows or reasonably should know that a particularconflict exists. State v. White, 80 Wash.App. 406, 413, 907P.2d 310 (1995); State v. Martinez, 53 Wash.App. 709, 715,770 P.2d 646.

¶ 55 If an attorney does not heed an admonition towithdraw, he injures his profession, demeans it in the eyeof the public, does a disservice to this court, and runsthe risk even of subverting the justice system. Int'l Bus.Machines Corp. v. Levin, 579 F.2d 271, 283 (3rd Cir.1978);Chou–Chen Chems., Inc., 31 B.R. at 852. To protectjudicial integrity, this court must address conflicts of

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interest directly when they appear. MacArthur v. Bank ofN.Y., 524 F.Supp. 1205, 1209–10 (S.D.N.Y.1981); Chou–Chen Chems., Inc., 31 B.R. at 852.

¶ 56 We are mindful of the delay and financial hardshipRick and Linda Wixom face as a result of our orderof disqualification. Rick should obtain new counsel andLinda must respond to any forthcoming brief Rickmay file. But the rales do not permit exception to theethical precepts enshrined in the rules of professionalconduct. If expense is an exception, the exception wouldsoon swallow the rule. Premium Products, Inc. v. ProPerformance Sports, LLC, 997 F.Supp.2d 433, 2014 WL644398 (E.D.Va. Feb. 19); see, also e.g., United States v.Peng, 766 F.2d 82, 87 (2d Cir.1985); Universal AthleticSales Co. v. Am. Gym, Recreational & Athletic Equip.Corp., 546 F.2d 530, 538 n. 21 (3d Cir.1976); Wickes v.Ward, 706 F.Supp. 290, 293 (S.D.N.Y.1989); Fed. DepositIns. Corp. v. Sierra *906 Res., Inc., 682 F.Supp. 1167,1171 (D.Colo.1987); Kalmanovitz v. G. Heileman BrewingCo., 610 F.Supp. 1319, 1326 (D.Del.1985); May's FamilyCtrs., Inc. v. Goodman's Inc., 590 F.Supp. 1163, 1165(N.D.Ill.1984); Teleprompter of Erie, Inc. v. City of Erie,573 F.Supp. 963, 966 (W.D.Pa.1983); MacArthur, 524F.Supp. at 1210.

Self Representation[18] ¶ 57 Upon withdrawal of Robert Caruso from

representation of Rick Wixom, Caruso still holdsobligations to Wixom. A difficult question is whetherCaruso may represent himself and continue to advocate,on his behalf, that any sanctions should be imposed onlyon his client.

**1076 ¶ 58 RPC 1.9 addresses duties owed a formerclient. The rule reads, in relevant part:

(a) A lawyer who has formerlyrepresented a client in a matter shallnot thereafter represent anotherperson in the same or a substantiallyrelated matter in which that person'sinterests are materially adverse tothe interests of the former clientunless the former client givesinformed consent, confirmed inwriting.

¶ 59 Under this rule, a lawyer who has representedmultiple clients in a matter may not represent one of theclients against the others in the same or a substantiallyrelated matter after a dispute arises among the clientsin that matter, unless all affected clients give informedconsent. RPC 1.9 cmt. 1. If we literally apply the ruleand its comment, we must order Robert Caruso to ceaserepresenting himself in this appeal. Caruso will either needto hire his own lawyer or end advocacy of his position thatonly Rick Wixom should pay the fees and costs awardedLinda Wixom. Otherwise, Caruso would represent oneclient, himself, against another client, Rick Wixom, in thesame matter after a dispute has arisen. We might also needto address whether we would permit Wixom to waive anyconflict.

*907 ¶ 60 We find no case wherein a court addresseswhether an attorney, when assessed sanctions jointlywith his client, may continue to represent himself.Therefore, we review the competing policies and goalsbehind whether the lawyer should be disqualified. Forthe time being, we do not disqualify Robert Carusofrom further representation of himself, but we imposecertain restrictions upon him consistent with the rulesof professional conduct that may, in essence, result indisqualification.

[19] ¶ 61 An attorney may represent himself in a lawsuitbrought by a client for legal malpractice. Farrington v.Law Firm of Sessions, Fishman, 96–1486 (La.2/25/97),687 So.2d 997, 1001–02. In this setting, the clientinitiates the conflict. The nature of the suit may bringclient confidences into a public forum, such that theclient impliedly waives the attorney-client privilege. RickWixom did not instigate the conflict with Robert Caruso,nor has Wixom voluntarily waived any confidentialcommunication privilege. Thus, the legal malpractice ruleshould not apply.

¶ 62 The federal district court addressed a similar situationin Anschutz Petroleum, 112 F.R.D. 355. The courtgranted plaintiff's motion to strike defendants' third-partycomplaint and granted plaintiff's motion for sanctionsunder FRCP 11. The court imposed sanctions only upondefendants' counsel. The court further noted that, ifcounsel wished to shift some of the sanctions upon hisclients, the client must be represented by separate counsel.The court did not rule that counsel would need to hireindependent counsel for himself.

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¶ 63 Anschutz Petroleum was decided in a different context.The court found the suit to be frivolous because counselasserted thoughtless theories based upon undisputedfacts, not because the defendants personally forwardedunsupported factual allegations. In the present case, RickWixom and his new wife testified about alleged conductof Linda Wixom that had no basis in fact. Thus, they maybe at fault for at least some of the frivolity of the suit.At the same *908 time, Rick Wixom asserted many ofthe factual allegations only after Robert Caruso appearedas counsel. The tactics taken by Wixom changed uponrepresentation by Caruso. Thus, Rick Wixom and RobertCaruso could engage in legitimate and noteworthy fingerpointing at one another.

¶ 64 Central to the attorney's duty of loyalty is notto devote time and effort to harm the client's interests.Because Robert Caruso placed in his brief a sectionarguing that sanctions should not be imposed upon himto the detriment of his client, we strike that portion of hisbrief found on pages 45–46.

¶ 65 We hold that Robert Caruso may argue that sanctionsshould be imposed only upon Rick Wixom, assumingwe uphold any sanctions. Nevertheless, Caruso may doso only through representation by independent counsel.We reject the implication, in Anschutz Petroleum, 112F.R.D. 355, that counsel, on his own, may attempt toshift sanctions to his client as long as the client hasnew, independent counsel. Such conduct by **1077 anattorney against a former client firmly implicates the dutynot to harm a former client in the matter related to theattorney's representation of the client.

¶ 66 We note that, if Robert Caruso employs anindependent attorney to advocate on his behalf, Carusocould merely provide his lawyer the facts and argumentson his behalf and the attorney could simply adopt thosepositions. Caruso could simply ask his counsel to filea brief identical to the section of the brief we struck.Conceivably, Caruso could write any further briefs thatthe attorney could sign without review. Robert Carusocould thereby do indirectly what we bar him from doingdirectly. We see no way to avoid this situation otherthan we note that Caruso's counsel will be bound by

professional rules to use independent judgment and not toforward any frivolous claims on behalf of Caruso.

¶ 67 A reason behind disqualifying an attorney fromrepresenting a client against a former client is that theattorney may hold confidences of the former client that*909 could be used, sometimes subtly, against the

former client. RPC 1.8(b); RPC 1.9(c)(1). To his credit,Caruso did not employ any confidential informationwhen advocating that any sanctions should be imposedonly upon Wixom. We hold, however, that, Caruso maynot in any later filing, through new counsel, discloseany confidences of Rick Wixom, unless the disclosurereasonably responds to any accusation made by Wixomagainst Caruso.

CONCLUSION

¶ 68 We remove Robert Caruso from representing RickWixom in this appeal, and we strike that portion ofWixom's opening brief, in which Caruso argues anysanctions should be imposed only against his client. Wedefer the hearing on the merits to our December docket,without oral argument. Rick Wixom and Robert Carusomay hire new counsel and address the question of uponwhom sanctions should be imposed, assuming this courtupholds the award of attorney fees and costs below.If Caruso wishes to argue that sanctions should onlybe imposed upon Wixom, Caruso must do so throughindependent counsel. In any new brief, neither Caruso norWixom may address again whether the award entered bythe trial court should be upheld. If either Rick Wixom orRobert Caruso file another brief, the brief must be filed byFriday, September 5, 2014. Rick Wixom or Robert Carusomay respond to the other's brief by September 26, 2014.Linda Wixom may file a responsive brief also by Friday,September 26, 2014.

WE CONCUR: SIDDOWAY, C.J., and LAWRENCE–BERREY, J.

All Citations

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283 Va. 86Supreme Court of Virginia.

NORTHERN VIRGINIA REAL ESTATE, INC., et al.v.

Karen MARTINS, et al.Forrest Walpole

v.Karen Martins, et al.

Record Nos. 101836, 101844.|

Jan. 13, 2012.

SynopsisBackground: Listing real estate agency and brokerbrought action against vendors, purchaser's agencyand brokers, alleging conspiracy to harm in business,interference with contract, interference with contractexpectancy, and defamation after vendors terminatedlisting and thereafter sold the subject real estate. After theclose of plaintiffs' case-in-chief, the Circuit Court, FairfaxCounty, Jonathan C. Thacher, J., granted plaintiffs'motion to nonsuit and dismissed the action, suspendedthat order, and subsequently granted defendants' motionfor sanctions against plaintiffs and their attorney.Plaintiffs and their attorney appealed.

Holdings: The Supreme Court, Donald W. Lemons, J.,held that:

[1] trial court had jurisdiction to consider and imposesanctions;

[2] facts of the case could not support a reasonable beliefthat interference with contract expectancy claim was wellgrounded in fact or law;

[3] facts could not support a reasonable belief thatconspiracy to harm in business claim was well groundedin fact or law;

[4] facts could not support a reasonable belief thatdefamation claim against vendor was well grounded infact or law;

[5] statements which vendors allegedly made to theVirginia Department of Professional and OccupationalRegulation were privileged;

[6] court could impose sanctions jointly and severally; and

[7] court considered appropriate factors when awardingattorney's fees as sanctions.

Affirmed.

Attorneys and Law Firms

**124 Kevin M. Rose (Lindsay C. Brubaker;BotkinRose, Harrisonburg, on briefs), for appellantsNorthern Virginia Real Estate, Inc., et al.

Sean C. E. McDonough, Alexandria (David D. Hudgins;Reese A. Pearson; Hudgins Law Firm, on briefs), forappellant Forrest Walpole.

Michael W. Tompkins, Alexandria (Rich RosenthalBrincefield Manitta Dzubin & Kroeger, on brief), forappellees David Gavin and Donna M. Gavin.

Mikhael D. Charnoff (Sands Anderson, McLean, onbrief), for appellees Karen Martins and McEnearneyAssociates, Inc.

Amicus Curiae: Virginia Trial Lawyers Association(Roger T. Creager; Mary Lynn Tate; Creager Law Firm,Richmond; Tate Law, Abingdon, on brief), in support ofappellants.

Present: All the Justices.

Opinion

Opinion By Justice DONALD W. LEMONS.

*94 In these appeals, we consider whether the CircuitCourt of Fairfax County erred when it imposed sanctions,pursuant to Code § 8.01–271.1, against Northern VirginiaReal Estate, Inc. (“NVRE”), its principal broker, LaurenKivlighan (“Kivlighan”), and their counsel, ForrestWalpole (“Walpole”).

I. Facts and Proceedings Below 1

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In July 2007, NVRE and Kivlighan (together, “theplaintiffs”), filed a four-count complaint againstMcEnearney Associates, Inc., its real estate agent KarenMartins, and David and Donna M. Gavin (together, “thedefendants”), alleging conspiracy to harm in business,interference with contract, interference with contractexpectancy, and defamation.

Specifically, the plaintiffs' complaint alleged that: (1)Donna Gavin (acting as attorney-in-fact for her motherBernadette A. Kennedy) signed a written 90–day exclusivelisting agreement (“listing agreement”) with NVRE forNVRE to sell certain real estate (“the Kennedy property”)owned by the Bernadette A. Kennedy Living *95Trust (“the Trust”), Bernadette A. Kennedy and DonnaM. Gavin, Trustees, in exchange for a five percentcommission of the sales price; (2) the defendants knewof the listing agreement; (3) NVRE delivered a writtenpurchase offer for $750,000 to Donna Gavin on May 5,2007; (4) thereafter, the defendants formed a conspiracyand interfered with NVRE's listing agreement or contractexpectancy, which caused Donna Gavin to terminatethe listing agreement on May 8, 2007, and NVREto lose the five percent commission when Kennedy'sproperty was sold to buyers represented by McEnearneyAssociates, Inc. (“MAI”) and Karen Martins (“Martins”).The plaintiffs sought $1 million in compensatory damagesand $500,000 in punitive damages.

**125 Regarding the defamation count, plaintiffs allegedthat: (1) between May 4 and May 8, 2007, MAI andMartins falsely accused Kivlighan of “not working inthe best interest” of the Kennedy property's owner and“discouraging [Martins] from submitting a written offerto purchase the [Kennedy] property”; (2) David Gavinfalsely accused Kivlighan of “lying” to him and DonnaGavin; and (3) the Gavins, writing to the VirginiaDepartment of Professional and Occupational Regulation(“DPOR”), falsely accused Kivlighan of being “anuntrustworthy agent” who “misrepresented her clients,”and turned Kennedy's property into a “pocket listing.”The complaint further asserted, within the defamationcount, that plaintiffs were “likely to have evidentiarysupport after a reasonable opportunity for discovery.”

The Gavins demurred to the defamation count and MAIand Martins moved for a bill of particulars. In a consentorder, the trial court sustained the Gavins' demurrer tothe defamation claims and granted MAI's and Martins'

motion for a bill of particulars, and allowed plaintiffs toamend their complaint.

Plaintiffs subsequently filed an eleven-count amendedcomplaint, alleging two counts each of conspiracy to harmin business and interference with contract expectancyagainst David Gavin, Martins, and MAI; three countsof defamation as to MAI and Martins; three counts ofdefamation as to David and Donna Gavin; and onecount of defamation as to David Gavin, separately. Theamended complaint included allegations that Martinsstated in a May 8, 2007 letter to the Gavins that, “[m]ybroker [ (MAI) ] had myself add certain verbiage to helpprotect you against your former obligation to the other*96 agent,” and that David Gavin told Martins, “I

caught [Kivlighan] in a few lies.”

The plaintiffs also filed a bill of particulars listing theirdamages as $168,000 (trebled to $504,000)—consisting of$37,500, which represented a five percent commission onthe $750,000 purchase offer submitted to Donna Gavin byKivlighan, plus $130,500, which represented a six percentcommission on a future sale of the property for $2.175million as a result of improvements the plaintiffs proposedtheir prospective buyer (“Alnifaidy”) was going to maketo the property.

Regarding conspiracy, the bill of particulars stated that,beginning May 5, 2007, David Gavin and Martins actedtogether to deny NVRE its commission when they: (1)engaged in “wrongful, slanderous attacks on the characterand integrity of [Kivlighan] with the intent of destroyingthe confidence [Mrs. Gavin] had in her”; (2) causedDonna Gavin “to cease working with plaintiffs and toignore [NVRE's] valid exclusive listing agreement”; (3)“in violation of law, failed to work through [NVRE]in connection with all offers to purchase the [Kennedy]Property”; and (4) “sought to duplicate the Alnifaidy$700,000 written cash offer for the [Kennedy] Propertydelivered by [NVRE] but under a ‘For Sale by Owner’scheme” with a three percent commission to MAI.

MAI and Martins demurred to the plaintiffs' amendedcomplaint as amplified by the bill of particulars, andthe Gavins demurred to the plaintiffs' allegations ofdefamation, claiming absolute privilege because thestatements they were alleged to have made “were made(if at all) in the course of a quasi-judicial proceeding.”The trial court: (1) sustained MAI's and Martins' demurrer

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to defamation without leave to amend; (2) sustainedthe Gavins' plea of absolute privilege and dismissedthe defamation counts involving their statements madeto DPOR; (3) sustained David Gavin's demurrer todefamation; and (4) granted the plaintiffs leave to file asecond amended complaint.

The plaintiffs filed an eight-count second amendedcomplaint, again alleging two counts each of conspiracyto harm in business and interference with contractexpectancy against David Gavin, Martins, and MAI;three counts of defamation against the Gavins as to theirstatements made to DPOR; and one count of defamationagainst David Gavin separately as to the statement heallegedly made to Martins, that he “caught [Kivlighan] ina few lies.”

*97 MAI and Martins demurred to the plaintiffs' secondamended complaint, but the trial court overruled theirdemurrer. David Gavin also demurred to the conspiracyto harm in business and interference with contract **126expectancy allegations but the trial court did not rule onhis demurrer before trial.

Significantly, MAI and Martins asserted, in their answerto the plaintiffs' second amended complaint, a “FifthAffirmative Defense,” namely, that “[n]either Plaintiffever had a contract with the owner of the Subject Property,nor did either Plaintiff have a reasonable contractualor business expectancy which could support a claim oftortious interference. A reply is requested pursuant toVirginia Rules 3:11 and 1:4(e).” The plaintiffs neverreplied to MAI's and Martins' fifth affirmative defense,and it was deemed admitted before trial. The caseproceeded to a jury trial against MAI, Martins, and DavidGavin on conspiracy to harm in business and interferencewith contract expectancy, and against David Gavin on theone count of defamation alleging that he told Martins, “Icaught [Kivlighan] in a few lies.”

At trial, the evidence demonstrated that: (1) Martinscalled Donna Gavin on May 2, 2007, and that Martinstold Donna Gavin she had possible buyers for the home;(2) Donna Gavin told Martins that David Gavin wouldcall her back “because we had a real estate agent and hecould provide her with all the information”; (3) DavidGavin returned Martins' call on May 3, 2007; and (4)David Gavin gave Kivlighan's phone number to Martins.Martins subsequently called Kivlighan, who told her there

was a full-price offer with a discounted commission forthe Kennedy property, which Kivlighan thought that herclients would take. When Martins' prospective buyers (the“Wheelers”) heard of the full price offer, they told Martinsnot to make an offer because they did not want to get intoa bidding war.

On May 4, 2007, Kivlighan sent by facsimile a $730,000offer from Alnifaidy to Donna Gavin. On May 5, 2007,David Gavin called Kivlighan, upset about the offer'sconditions, including the fact that there was a homeinspection contingency despite the cover sheet to the offerstating that the offer was for the Kennedy property “as-is”and that the offer included a four-point-one (4.1) percentseller subsidy, resulting in an actual offer of just over$700,000, not $730,000.

Thereafter, on May 5, 2007, David Gavin left a voicemailfor Martins; Martins returned David Gavin's call thenext day and told *98 him, in response to his questionwhy she had never submitted an offer on behalf of herinterested buyers, that Kivlighan had discouraged herfrom submitting an offer. David Gavin told Martins thatthey were “in the process of terminating” Kivlighan. Attrial, David Gavin denied saying he had caught Kivlighan“in a few lies,” and Martins offered no evidence that Gavinmade that statement. Both denied the allegation thatMartins said Kivlighan was not working in the Gavins'best interest.

On May 7, 2007, Donna Gavin sent Kivlighan anelectronic mail message stating that she would notaccept Alnifaidy's offer unless it was resubmitted underdifferent terms, including a reduction in the seller subsidyand clarification that the house would be sold “as-is.”Donna Gavin also asked Kivlighan to “explain why Mr.Alnifaidy's Earnest Money [wa]s in the form of a Check[dated almost one and a half (1 ½) ] months prior to m[y]signing [the listing agreement].”

Donna Gavin testified that, based on “what [she] saw in[Alnifaidy's offer and a conversation with her husband,she decided] to have an attorney look at th[e] contract.There's something just not right about it.” As a resultof the information she received from a lawyer, DonnaGavin concluded that she “had grounds to terminate[Kivlighan],” and on May 8, 2007, she sent Kivlighanwritten notice terminating the listing agreement.

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Donna Gavin subsequently refused an increased offerfrom Alnifaidy, having received it from Kivlighan aftershe signed a contract to sell the Kennedy property to theWheelers. Thereafter, the Kennedy property was sold tothe Wheelers with a buyer's commission paid to MAI.

Significantly, Kivlighan admitted at trial that: (1) she wasnot owed a commission on Alnifaidy's offers; (2) MAInever had a listing agreement for the Kennedy property;and (3) she never heard any telephone conversationsbetween Martins and Donna or David Gavin. Alnifaidytestified that he never had any agreement with Kivlighanor told **127 her that she could sell the Kennedyproperty for him in the future.

The defendants moved to strike the plaintiffs' evidenceat the close of the plaintiffs' case-in-chief but, before thetrial court ruled on the defendants' motion to strike, theplaintiffs moved to nonsuit, and the trial court grantedthe plaintiffs' motion to nonsuit as against all defendants.The defendants stated they intended to file motions forsanctions, and the trial court suggested that counsel for allthe *99 parties “confer. If there are any motions, decidea day that you want to argue....” The defendants' counselsuggested “a suspending order of 30 days ... just to besafe,” and the trial court stated that “[t]hirty days is fine,or you can say until further order of Court. Whateverlanguage you can agree on.”

On April 30, 2008, the trial court entered an order which:(1) granted the plaintiffs' motion to nonsuit all counts;(2) dismissed the case as to all counts and all parties; and(3) further stated that “this Order is SUSPENDED untilfurther order of this Court.”

On July 11, 2008, the defendants filed motions forsanctions against the plaintiffs and plaintiffs' counsel,Forrest Walpole (“Walpole”), seeking attorneys' fees andcosts, and arguing that the plaintiffs violated Code §8.01–271.1 “by filing this suit without any basis in fact,without support in law, and with improper purposes, allas prohibited by statute.” In response, the plaintiffs andWalpole filed an opposition to the defendants' motions forsanctions, arguing that the motion for sanctions should bedenied because the plaintiffs and plaintiffs' counsel “[i]ngood faith and after reasonable inquiry ... filed the claimsfor conspiracy, defamation and tortious interference withcontract and contract expectancy when Defendants acted

in concert to deprive NVRE of a commission and contractexpectancy from the sale of [the Kennedy property].”

The trial court subsequently heard oral argument on themotions for sanctions, and the defendants submitted thebilling records for their attorneys' fees and costs to the trialcourt. On March 17, 2009, the trial court issued a letteropinion explaining its rulings, and followed that on May14, 2009, with a lengthy order granting the defendants'motions for sanctions.

Specifically, the trial court found that: (1) the complaint,by stating that the allegations were likely to have support“after reasonable opportunity for discovery,” was a “perse” violation of Code § 8.01–271.1 under Ford MotorCo. v. Benitez, 273 Va. 242, 639 S.E.2d 203 (2007); (2)the plaintiffs' claims “were filed out of a vindictive andmalevolent desire to injure and intimidate a businesscompetitor”; and (3) the plaintiffs lacked “any factualbasis for their $135,000 claim to the ‘second commission’,and lack[ed] any basis for the $1.35 million defamationclaims. Plaintiffs further lack[ed] a factual basis for aconspiracy claim.”

Although the trial court's May 14, 2009 order statedthat the defendants are entitled to sanctions, the orderalso stated that, “on *100 this record, the Court isunable to determine the appropriate size of the sanction.”As a result, the trial court continued the matter “tohear evidence and argument as to the quantum ofsanctions and reasonableness of Defendant[s'] attorney'sfees, respectively, whether the said expenses are related tothe violations of the sanctions statute and to determineas against whom the respective sanction(s) should beassessed.”

After an evidentiary hearing, at which the trial courtheard voluminous testimony, both expert and otherwise,regarding the defendants' attorneys' fees, as well asKivlighan's own testimony that she relied on Walpole'sadvice, the trial court issued a letter opinion and orderon June 29, 2010, ordering the plaintiffs and Walpole,jointly and severally, to pay $113,778.06 to MAI andMartins, and $158,318.40 to the Gavins. The trial courtalso ordered “that the Court's suspension of Plaintiffs'nonsuit taken on April [30], 2008 is lifted.”

Specifically, the trial court found that: (1) the appropriatesanction in this case is the reasonable attorneys' fees and

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costs incurred by the defendants; (2) attorneys and theirclients are both “required to act appropriately, ethically,and within the confines of the law when litigating casesin Virginia courts”; and (3) there is “substantial evidenceof sanctionable **128 behavior on the part of boththe litigants and the[ir] lawyer.” The trial court furtheropined that, “[Kivlighan's] actions showed a clear intentto support [filing] these claims, which were speculative atbest ... [m]oreover, her actions throughout the litigationare indicative of and establish the improper purpose withwhich she filed this lawsuit.”

The trial court also rejected the plaintiffs' and Walpole'sargument that the attorneys' fees and costs claimed by thedefendants were unreasonable because: (1) the defendantsfailed to mitigate their damages; (2) defendants' counselused block billing practices; and (3) the attorneys' feesincurred by the defendants were excessive. The trial courtsubsequently denied: (1) the plaintiffs' and Walpole'smotions to suspend the June 29, 2010 order “to permitPlaintiffs [and Walpole] adequate time to file theirMotion[s] for Reconsideration and for the Court toconsider and rule upon such motion[s]”; and (2) Walpole'smotion for reconsideration and renewed motion for entryof a suspending order because “Walpole has not raised anyissues not already considered in the matter.”

*101 NVRE, Kivlighan, and Walpole timely filed theirnotices of appeal and we granted these appeals on thefollowing assignments of error:

For Northern Virginia Real Estate, Inc., et al. v. KarenMartins, et al., Record No. 101836:

1. The trial court erred in awarding sanctions underVa.Code § 8.01–271.1 against NVRE, Kivlighan,and their trial counsel and in favor of Martins,MAI, Donna Gavin, and David Gavin when thetrial court lacked jurisdiction to do so becausethe motions for sanctions were made, heard, anddecided more than 21 days after entry of a nonsuitorder, and the trial court lacked authority underRule 1:1 of the Rules of the Supreme Court ofVirginia to suspend the finality of the nonsuitorder.

2. The trial court erred in imposing sanctions underVa.Code § 8.01–271.1 against NVRE, Kivlighan,and their trial counsel, jointly and severally, ratherthan apportioning the sanctions among them

based on their respective conduct relative to eachof the parties that was awarded sanctions.

3. The trial court erred in awarding sanctionsunder Va.Code § 8.01–271.1 against NVRE,Kivlighan and their trial counsel and in favorof Martins, MAI, Donna Gavin, and DavidGavin because it abused its discretion by makingits sanction determination based on post-filingfactual findings, evidentiary rulings, hindsight, andimproper considerations rather than an objectiveview of whether NVRE, Kivlighan, and theirtrial counsel, after reasonable inquiry, could haveformed a reasonable belief that the Complaint,Amended Complaint, Bill of Particulars, andSecond Amended Complaint met the certificationrequirements of Va.Code § 8.01–271.1 at the timeeach was respectively filed.

For Forrest Walpole v. Karen Martins, et al., RecordNo. 101844:

1. The trial court erred in awarding sanctions underVa.Code § 8.01–271.1 against Walpole, NVRE,and Kivlighan because it abused its discretion bymaking its sanction determination based on post-filing factual findings, evidentiary rulings, andother hindsight rather than an objective view ofwhether NVRE, Kivlighan, and Walpole, afterreasonable inquiry, could have *102 formed areasonable belief that the Complaint, AmendedComplaint, Second Amended Complaint and Billof Particulars met the certification requirements ofVa.Code § 8.01–271.1 at the time it was filed.

2. The trial court erred in determining the termsof and quantum of sanctions against Walpole,NVRE and Kivlighan because it did not properlyconsider the defendants' failure to mitigate, thebilling practices of defendants' **129 counselors,the punitive effect of the award, and ability to pay.

3. The trial court erred when it denied Walpole'smotion for entry of a suspending order withoutgiving Walpole the opportunity to present oralargument under Va. Sup.Ct. R. 4:15(d).

4. The trial court erred in awarding sanctionsunder Va.Code § 8.01–271.1 against NVRE,Kivlighan and Walpole when the trial court lackedjurisdiction to do so because the motions for

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sanctions were made, heard, and decided morethan 21 days after entry of a nonsuit order, and thetrial court lacked authority under Rule 1:1 of theRules of the Supreme Court of Virginia to suspendthe finality of the nonsuit order.

II. Analysis

A. Standard of Review

[1] We have clearly articulated the standard of review forcases of statutory interpretation:

[A]n issue of statutory interpretationis a pure question of law which wereview de novo. When the languageof a statute is unambiguous, weare bound by the plain meaningof that language. Furthermore, wemust give effect to the legislature'sintention as expressed by thelanguage used unless a literalinterpretation of the language wouldresult in a manifest absurdity. If astatute is subject to more than oneinterpretation, we must apply theinterpretation that will carry out thelegislative intent behind the statute.

Conyers v. Martial Arts World of Richmond, Inc., 273 Va.96, 104, 639 S.E.2d 174, 178 (2007) (citations omitted).Similarly, as a question of law, the interpretation of one ofthe Rules of this Court is *103 subject to de novo review.See Brown v. Commonwealth, 279 Va. 210, 217, 688 S.E.2d185, 189 (2010).

[2] Additionally, in reviewing a trial court's award ofsanctions under Code § 8.01–271.1, we apply an abuse ofdiscretion standard. Flippo v. CSC Assocs. III, L.L.C., 262Va. 48, 65, 547 S.E.2d 216, 227 (2001). We have statedthat,

[i]n applying that standard,we use an objective standardof reasonableness in determiningwhether a litigant and his attorney,after reasonable inquiry, could haveformed a reasonable belief that the

pleading was well grounded in fact,warranted by existing law or a goodfaith argument for the extension,modification, or reversal of existinglaw, and not interposed for animproper purpose.

Id. at 65–66, 547 S.E.2d at 227. We have also held that“a court's imposition of a sanction will not be reversedon appeal unless the court abused its discretion in 1) itsdecision to sanction the litigant, or 2) in the court's choiceof the particular sanction employed.” Switzer v. Switzer,273 Va. 326, 331, 641 S.E.2d 80, 83 (2007).

B. Rule 1:1

[3] The plaintiffs argue that the trial court erred inawarding sanctions against them and in favor of thedefendants because “the motions for sanctions were made,heard, and decided more than 21 days after entry of anonsuit order, and the trial court lacked authority underRule 1:1 of the Rules of [this Court] to suspend the finalityof the nonsuit order.” Specifically, the plaintiffs arguethat the trial court was without authority to suspend thenonsuit order because: (1) there were no motions pendingat the time of the nonsuit; (2) “Rule 1:1 must be interpretedto prohibit trial courts from generally suspending nonsuitorders to allow motions for sanctions to be filed, heard,and decided more than 21 days after [a] nonsuit is takenas a matter of right”; and (3) the nonsuit order did not“clearly and expressly suspend the final judgment that isobtained upon the granting of a motion for nonsuit.” Wedisagree and find these arguments without merit.

Rule 1:1 declares that “[a]ll final judgments, orders, anddecrees, irrespective of terms of court, shall remain underthe control *104 of the trial court and subject to bemodified, vacated, or suspended for twenty-one days afterthe date of entry, and no longer.”

**130 Significantly, for the purposes of this case, we havepreviously held that

the provisions of Rule 1:1 aremandatory in order to assure thecertainty and stability that thefinality of judgments brings. Once afinal judgment has been entered andthe twenty-one day time period of

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Rule 1:1 has expired, the trial courtis thereafter without jurisdictionin the case. Thus, only an orderwithin the twenty-one day timeperiod that clearly and expresslymodifies, vacates, or suspends thefinal judgment will interrupt orextend the running of that timeperiod so as to permit the trial courtto retain jurisdiction in the case.

Super Fresh Food Mkts. of Va., Inc. v. Ruffin, 263 Va.555, 563–64, 561 S.E.2d 734, 739 (2002) (some emphasisomitted). Additionally, we have noted that, “from its verynature, an order granting a nonsuit should be subject tothe provisions of Rule 1:1,” and “the concept of nonsuit issufficiently imbued with the attributes of finality to satisfythe requirements of Rule 1:1.” James v. James, 263 Va.474, 481, 562 S.E.2d 133, 137 (2002).

In this case, the trial court entered an order granting theplaintiffs a nonsuit on April 30, 2008. However, the trialcourt also expressly suspended the nonsuit order on thatsame date, pursuant to Rule 1:1, stating:

This matter came to be heard on the 30th day of April,2008, on the Plaintiff [s'] motion to nonsuit all countsand Defendants' oppositions thereto.

Upon the matter presented to the Court at the hearing,it is hereby

ADJUDGED, ORDERED, and, DECREED asfollows:

The Motion[ ] to Nonsuit is granted, and this case isdismissed as to all counts and all parties; and it is further

ADJUDGED, ORDERED, and DECREED that thisOrder is SUSPENDED until further order of this Court.

(Emphasis added.) The trial court did so in order toentertain the defendants' motions for sanctions.

*105 The trial court was well within its authority underRule 1:1 to suspend the nonsuit order as it did and, byexplicitly doing so, it properly retained jurisdiction in thiscase. Rule 1:1; Super Fresh Food Markets, 263 Va. at 563–64, 561 S.E.2d at 739. Accordingly, we hold that the trialcourt did not lack jurisdiction to consider and imposesanctions, as it did in this case, because the trial court

properly suspended the nonsuit order within the 21–dayperiod provided for in Rule 1:1. The trial court retainedjurisdiction over this suit until 21 days after June 29, 2010—the date upon which the trial court lifted the suspensionof the April 30, 2008 nonsuit order and entered the finalorder in this case.

C. Code § 8.01–271.1

Code § 8.01–271.1 provides that,

every pleading, written motion, and other paper of aparty represented by an attorney shall be signed by atleast one attorney of record in his individual name....

The signature of an attorney or party constitutesa certificate by him that (i) he has read thepleading, motion, or other paper, (ii) to the best ofhis knowledge, information and belief, formed afterreasonable inquiry, it is well grounded in fact and iswarranted by existing law or a good faith argument forthe extension, modification, or reversal of existing law,and (iii) it is not interposed for any improper purpose,such as to harass or to cause unnecessary delay orneedless increase in the cost of litigation.

The statute further provides that if this rule is violated,the court “shall impose” an appropriate sanction upon theattorney, a represented party, “or both,” and that suchsanctions may include reasonable attorney's fees. Code §8.01–271.1.

Accordingly, we must determine whether the trial courtproperly concluded that the plaintiffs and their attorney,after a reasonable inquiry, could not have formed areasonable belief that the second amended complaint waswell grounded in fact and warranted by existing law, orby a good faith argument for the extension, modification,or reversal of existing law. Flippo, 262 Va. at 65–66, 547S.E.2d at 227. Significantly, we have previously stated thata “trial court [is] not limited to the record in the presentcase, but [may] *106 properly consider any relevant andadmissible evidence **131 tending to show the attorney'sstate of knowledge at the time in question.” Benitez, 273Va. at 251, 639 S.E.2d at 207.

In this case, the second amended complaint was filedafter the trial court allowed the plaintiffs to amend boththeir initial complaint and their first amended complaint.

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Nevertheless, the trial court noted, in its order grantingthe defendants' motions for sanctions, that “Plaintiffs' [sic]apparently have forgotten that many of their claims weredismissed on demurrer, and with prejudice.” The trialcourt further noted that,

[a]t minimum, the filing of theinitial complaint violated [Code §8.01–271.1] by asserting in fournumbered paragraphs that theallegations therein were likely tohave support “after reasonableopportunity for discovery.” As thisCourt understands the VirginiaSupreme Court's decision in Benitez,such a pleading is a per seviolation of [Code] § 8.01–271.1.Although the [plaintiffs'] amendedcomplaint contained no such candidadmission that its allegations wereunsupported by fact, Plaintiffslack any factual basis for their$135,000 claim to the “secondcommission”, and lack any basisfor the $1.35 million defamationsclaims. Plaintiffs further lack afactual basis for a conspiracy claim.

Significantly, the trial court stated in its ruling grantingthe defendants' motions for sanctions:

The only claim Kivlighan ever advanced that wasreasonably well grounded in fact, is a $37,500 contractclaim. Instead of limiting the action to that claimKivlighan and her counsel chose to advance at leastthree wildly speculative claims that lacked any basisin fact. These three claims dramatically increased thecost and duration of the litigation. Counsel's decision topursue a three day jury trial in the face of a devastatingruling, that no contract existed between the parties,further increased the cost to the defendants, without anypossible chance of success.

Standing alone, the Court might conclude thatany of these claims were merely a mistake or anoversight by counsel, and might warrant only a mildsanction. However, the combination *107 of so manyfrivolous claims, supported by such wild speculation, sovirulently prosecuted even after any legitimate prospectof success had vanished, convinces the Court that the

claims were not an oversight or mistake. The Courtis of the firm conviction that they were filed outof a vindictive and malevolent desire to injure andintimidate a business competitor.

We hold that the trial court did not abuse its discretionin imposing sanctions in this case. Rather, the trial courtcorrectly applied an objective standard of reasonablenessin concluding that the facts of this case could not supporta reasonable belief that the plaintiffs' claims alleging: (1)interference with contract expectancy; (2) conspiracy toharm in business; and (3) defamation; along with thedamages sought, were well grounded in fact or law, asrequired by Code § 8.01–271.1.

1. Interference with Contract Expectancy

[4] Significantly, the trial court noted that it “imposeda pleading admission on the Plaintiffs [just before trial]for failing to respond to [the] Defendants' properlypropounded Fifth Affirmative Defense seeking a reply,”that, “[n]either Plaintiff ever had a contract with the ownerof the Subject Property, nor did either Plaintiff havea reasonable contractual or business expectancy whichcould support a claim of tortious interference. A reply isrequested pursuant to Virginia Rules 3:11 and 1:4(e).” Thetrial court's ruling deemed the plaintiffs to have admittedthe affirmative defense they failed to reply to and excludedany reference to, or evidence of, facts that conflicted withthat admission. Despite this damaging admission and theimposition of such “a devastating ruling,” the plaintiffs“insisted on proceeding with a three day jury trial” on allof its claims, including the allegation that the defendantsinterfered with contract expectancy.

Specifically, the plaintiffs alleged total damages of$168,000 (trebled to $504,000) as a result of thedefendants' interference with contract expectancy. Theplaintiffs further alleged that these damages consistedof $37,500, which represented a five percent commissionon the $750,000 Alnifaidy purchase **132 offer, plus$130,500, which represented a six percent commission onthe future sale of the property *108 for $2.175 million asa result of improvements Alnifaidy was supposedly goingto make to the property.

However, the trial court correctly found that, “[e]ven ifKivlighan did have a valid claim for a commission on

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the [Kennedy] property,” Kivlighan would have realized“at most $37,500 from any contractual interest sheacquired from the listing agreement”—and this is only“assuming that [Kivlighan's] pocket buyer's offer wasaccepted, and that she was paid both the buyer's andseller's agent commissions on the ‘unsubsidized’ contractprice of the highest offer her buyer ever made.” Thetrial court accurately noted that, “[i]n truth, [Kivlighan's]valid expectancy is probably limited to two-fifths of thatamount [ (or $15,000) ], because [the listing agreement]

provided for a seller's commission of only two percent.” 2

Moreover, the plaintiffs offered no evidence that couldpossibly lead the trial court to reasonably conclude thatthe plaintiffs ever had a factual basis for their claim for$130,500, which represented a six percent commissionon the future sale of the Kennedy property for $2.175million as a result of improvements Alnifaidy was going tomake to the property. The trial court noted that, althoughKivlighan claimed the loss of a commission from a second,future sale of the Kennedy property,

based upon her contention that shewas almost certain to obtain thelisting for the [Kennedy] Propertyagain after a new house wasbuilt[, h]er deposition testimonyestablished that she lacked a factualbasis to advance this theory.Furthermore, the testimony of Mr.Alnifaidy, both in his depositionand at trial, established that he hadnever engaged her as an agent to re-sell the [Kennedy] Property again inthe future. Indeed, [K]ivlighan lateradmitted at trial that she was notengaged to re-sell the property.

Alnifaidy testified at trial that he never told Kivlighanhe would let her sell the Kennedy property for him at alater date. The following exchange occurred during thedefendants' cross-examination of Alnifaidy at trial:

*109 [Defendants' Counsel:] [Y]ou never had a writtenagreement directly with Lauren Kivlighan, correct?

[Alnifaidy:] No.

[Defendants' Counsel:] And [Kivlighan] was never yourreal estate agent regarding any property at any time[?]

[Alnifaidy:] No.

[Defendants' Counsel:] And you never promised[Kivlighan] that she could be your real estate agent[?]

[Alnifaidy:] No.

[Defendants' Counsel:] That is correct?

[Alnifaidy:] That's correct. Yes.

[Defendants' Counsel:] In fact, [Kivlighan] never askedyou to be your real estate agent[?]

[Alnifaidy:] No.

Accordingly, we agree with the trial court's conclusionthat,

the claims [the plaintiffs] advanced for the “secondcommission” on a sale of the same property at (1)some unknown date an indefinite number of years inthe future, by (2) a seller whose offer to purchasethe property was twice rejected, to (3) a not evenspeculatively identified purchaser for (4) precisely$2.175 million dollars, after (5) a contractor, whom theseller who did not yet own the home had not entereda contract with, would have torn down the existingstructure and erected a mansion based on (6) unknownand unsolicited plans from an unidentified architect,are, to say it as kindly as possible, not “well groundedin fact and ... warranted by existing law or a good faithargument for the extension, modification, or reversal ofexisting law.”

Lastly, even if the plaintiffs may have had a validcontractual claim for a commission on the Kennedyproperty, it should be noted that the plaintiffs never filedsuit against the **133 actual owner of the Kennedyproperty, the Bernadette A. Kennedy Living Trust.Rather, the plaintiffs repeatedly named Donna Gavinpersonally, and not in her representative capacity asTrustee, as a defendant in their complaint, amendedcomplaint, and second amended complaint. The *110record demonstrates that they did so despite the fact thatthe plaintiffs were on notice, and actually knew, at thetime they filed the second amended complaint that theKennedy property was owned, at all relevant times, by theTrust.

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Specifically, MAI and Martins stated in theirmemorandum in support of their demurrer to the secondamended complaint that “title to the [Kennedy] propertywas actually held by the Bernadette A. Kennedy Trust,and not Bernadette A. Kennedy personally.” The Gavinsalso stated in their memorandum in support of theirdemurrer to the second amended complaint that, as“admitted in the [s]econd [a]mended [c]omplaint in ¶29 ... Bernadette Kennedy (in her personal capacity) wasnot the owner of the [Kennedy p]roperty, nor was ...Donna Gavin.” The plaintiffs, themselves, stated in ¶ 29of the second amended complaint that “actual title to the[Kennedy p]roperty was in the Bernadette A. KennedyTrust, Donna M. Gavin, Co–Trustee ... pursuant to a deedfrom Bernadette A. Kennedy, dated April 11, 2007.”

2. Conspiracy to Harm in Business

[5] [6] Regarding the plaintiffs' claims allegingconspiracy to harm in business, the trial court notedthat, “[a]lthough [the] Plaintiffs' pleadings never clarifiedwhether the business conspiracy claims were based ona common law right of action or the statutory causeauthorized by [Code] § 18.2–499, [the] Plaintiffs [took]the position that the action is for statutory conspiracy.”Statutory conspiracy requires “two or more persons [to]combine, associate, agree, mutually undertake or concerttogether for the purpose of ... willfully and maliciouslyinjuring another in his reputation, trade, business orprofession.” Code § 18.2–499(A). Moreover, “[i]n orderto sustain a claim for this statutory business conspiracy,the plaintiff must prove by clear and convincing evidencethat the defendants acted with legal malice, that is, proofthat the defendants acted intentionally, purposefully,and without lawful justification, and that such actionsinjured the plaintiff's business.” Williams v. DominionTech. Partners, L.L.C., 265 Va. 280, 290, 576 S.E.2d 752,757 (2003).

However, there is simply no factual basis to supportthe plaintiffs' allegation that David Gavin and Martinsformed any agreement to harm the plaintiffs in businessduring their telephone conversations. To the contrary,both David Gavin and Martins denied any agreement tocut Kivlighan out of the sale of the Kennedy property,*111 and David Gavin testified that the calls were

specifically prompted by the fact that Kivlighan only

presented the Gavins with Alnifaidy's offer and had notpresented them with the Wheelers' offer.

Additionally, the trial court correctly noted that the“Plaintiffs' entire factual basis for pleading conspiracyappears to be the fact that David Gavin and [Martins]spoke to each other on the telephone, that David Gavin‘exhibited a hostile and mean spirited manner,’ and that[Kivlighan] was discharged.” Accordingly, there is nofactual basis to support the plaintiffs' allegation thatDavid Gavin and Martins formed an agreement to harmthe plaintiffs and no evidence that the defendants actedwith malice. As a result, we agree with the trial court'sconclusion that “[n]o court could responsibly permit sucha claim to go to the jury without evidence, and no attorneycould responsibly plead such a claim without facts tosupport it.”

3. Defamation

[7] The plaintiffs' second amended complaint alleged thatDavid Gavin told Martins, “I caught [Kivlighan] in afew lies,” and the plaintiffs requested damages againstDavid Gavin in the amount of $1 million, plus $350,000in punitive damages. However, the plaintiffs offered noevidence that David Gavin actually spoke these words.

In fact, Kivlighan testified that she did not personallyoverhear any telephone conversations or any recordingsof any telephone conversations between either Martinsand David Gavin or Martins and Donna Gavin **134and that she “never personally heard [David Gavin andMartins] speaking.” Additionally, David Gavin deniedsaying that he had caught Kivlighan “in a few lies,” andMartins' testimony supported Gavin.

[8] Furthermore, the plaintiffs' repeated defamationcounts regarding the statements the Gavins allegedlymade to DPOR demonstrate clearly that each of theplaintiffs' successively filed complaints lacked a properbasis in law and in fact. Specifically, Walpole should haveknown that the statements allegedly made by the Gavinsto DPOR were privileged because they were made in thecourse of a quasi-judicial proceeding.

[9] We have previously held that “false, misleading,or defamatory communications, even if published withmalicious intent, are not actionable if they are material

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to, and made in the course of, a judicial or quasi-judicial proceeding.” Lockheed Info. Mgmt. Sys. Co. v.*112 Maximus, Inc., 259 Va. 92, 101, 524 S.E.2d 420,

424 (2000). Significantly, “[t]his absolute privilege hasbeen extended to communications made in administrativehearings so long as the ‘safeguards that surround’ judicialproceedings are present.” Id. (quoting Elder v. Holland,208 Va. 15, 22, 155 S.E.2d 369, 374 (1967)). “Thosesafeguards include such things as the power to issuesubpoenas, liability for perjury, and the applicabilityof the rules of evidence,” all of which are present inproceedings before DPOR, an administrative agency ofthe Commonwealth of Virginia. Id. See Code §§ 54.1–300 through –311 (pertaining to DPOR); Code § 2.2–4022 (providing that DPOR “may, and on request of anyparty to a case shall, issue subpoenas requiring testimonyor the production of books, papers, and physicalor other evidence”); Code § 2.2–4020 (providing thatpresiding officers at DPOR proceedings may “administeroaths and affirmations [and] receive probative evidence,exclude irrelevant, immaterial, insubstantial, privileged,or repetitive proofs, rebuttal, or cross-examination, ruleupon offers of proof, and oversee a verbatim recording ofthe evidence”); and Code § 18.2–434 (providing that “[i]fany person to whom an oath is lawfully administered onany occasion willfully swears falsely on such occasion ...he is guilty of perjury”).

Nevertheless, the plaintiffs' complaint, amendedcomplaint, and second amended complaint, all signed byWalpole, included three counts of defamation allegingthat the Gavins, writing to DPOR, falsely accusedKivlighan of being “an untrustworthy agent” who“misrepresented her clients,” and turned Kennedy'sproperty into a “pocket listing.” Inexplicably, the secondamended complaint included these defamation countsafter the trial court: (1) sustained the Gavins' demurrerto these counts in the original complaint and allowed theplaintiffs to amend their complaint; and (2) sustained theGavins' demurrer and plea of absolute privilege in relationto these defamation counts with prejudice, and allowedthe plaintiffs to again amend their amended complaint.

Lastly, it should be noted that the trial court concludedthat Kivlighan's “actions throughout the litigation [were]indicative of and establish[ed] the improper purpose withwhich she filed this lawsuit.” In particular, the trialcourt observed that Kivlighan was “nonresponsive tocounsels' questions both at her deposition ... and when

she took the witness stand throughout this litigation[,and] she constantly engaged in diatribes which were non-responsive and irrelevant,” *113 thereby demonstratingthat “she filed this lawsuit out of a vindictive andmalevolent desire to injure each of the [d]efendants and tointimidate a business competitor. Moreover, her behavioris indicative of the lack of a factual basis for bringing the[u]nderlying [a]ction.”

The trial court also found that Kivlighan's testimony at thehearing to determine the reasonableness of the defendants'attorneys' fees “was evasive and misleading at times.” Forexample, Kivlighan first testified that she only spoke toWalpole and one other attorney about the issues involvedin the underlying action before filing suit. Additionally,Kivlighan testified that she did not meet with any otherattorneys before filing this suit relative to her claim.

Upon cross-examination, defense counsel askedKivlighan if she spoke to any other attorneys aboutthe matter prior to consulting with Walpole. Kivlighanunequivocally **135 denied such conversations. Shewas forced, however, to admit that this assertion wasinaccurate and that she spoke to at least one other attorneyabout the case. The trial court noted that Kivlighan“attempted to justify the omission by claiming that shenever attempted to retain [the other attorney].” However,the trial court was “not impressed by the excuse andnote[d] yet another example of [Kivlighan's] lack of candoron the witness stand.”

Accordingly, we hold that the trial court did not abuseits discretion when it imposed sanctions against NVRE,Kivlighan, and Walpole, based upon its conclusionthat the plaintiffs' claims alleging interference withcontract expectancy, conspiracy to harm in business, anddefamation “lacked any basis in fact,” and “were filedout of a vindictive and malevolent desire to injure andintimidate a business competitor.”

D. The Imposition of Sanctions Jointly and Severally

[10] The plaintiffs argue that the trial court erred inimposing sanctions “jointly and severally, rather thanapportioning the sanctions among [NVRE, Kivlighan,and Walpole] based on their respective conduct.” Wedisagree.

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[11] Code § 8.01–271.1 provides that,

[i]f a pleading, motion, or otherpaper is signed or made in violationof this rule, the court ... shallimpose upon the person who signedthe paper or made the motion, arepresented *114 party, or both,an appropriate sanction, which mayinclude an order to pay to theother party or parties the amountof the reasonable expenses incurredbecause of the filing of the pleading,motion, or other paper or making ofthe motion, including a reasonableattorney's fee.

(Emphasis added.) Significantly, in the circumstances ofthis case—in which the parties against whom sanctionswere sought failed to provide the circuit court withevidence sufficient to permit it to make any distinctionbetween those parties—Code § 8.01–271.1 does notrequire a court to allocate fault or apportion sanctionsbetween a represented party and the party's attorney whenthe statute has been violated. Instead, Code § 8.01–271.1expressly provides for sanctions to be imposed upon botha represented party and the party's attorney.

We have previously noted that, “it is apparent thatthe General Assembly had the opportunity to makediscretionary a court's imposition of sanctions uponfinding a statutory violation, but elected not to do so.Instead, it used the mandatory words ‘shall impose ...an appropriate sanction.’ ” Benitez, 273 Va. at 249, 639S.E.2d at 206 (quoting Code § 8.01–271.1) (emphasis inoriginal). Significantly, in this case, the trial court twicemade written findings that NVRE, Kivlighan, and theirtrial counsel were each culpable for several violations ofCode § 8.01–271.1. Specifically, the trial court stated:

[T]here is substantial evidence of sanctionable behavioron the part of both the litigants and the lawyer.The evidence has established that [Kivlighan] wentto another lawyer, who advised her of a reasonableremedy that she may have had in this matter, abreach of contract action. That was simply not enoughfor Plaintiffs, and they continued to shop their case.[Walpole] offered Plaintiffs a grab bag of remedies. Hethen filed suit on behalf of Plaintiffs based upon theseremedies, with a lack of basis in law or fact.

[Kivlighan] was not a passive participant in this process.On the contrary, her actions showed a clear intent tosupport these claims, which were speculative at best.

[12] [13] The initial burden of proof rests with the partyseeking the imposition of sanctions to prove that Code§ 8.01–271.1 has been *115 violated, and that sanctionsand the amount thereof are appropriate. Significantly, wehave held that,

[a]s a general rule, confidentialcommunications between anattorney and his or her client madein the course of that relationshipand concerning the subject matterof the attorney's representationare privileged from disclosure. Theobjective of the attorney-clientprivilege is to encourage clientsto communicate with attorneysfreely, without fearing disclosureof those communications madein the course of representation,**136 thereby enabling attorneys

to provide informed and thoroughlegal advice.

Walton v. Mid–Atlantic Spine Specialists, P.C., 280Va. 113, 122, 694 S.E.2d 545, 549 (2010) (citationsomitted). Accordingly, most of the information necessaryto determine allocation of fault between attorney andclient may be hidden by the attorney-client privilege.Consequently, when sanctions are imposed againstrepresented parties and their counsel, and the sanctionedparties desire to seek allocation of fault or theapportionment of such sanctions, they carry the burden ofproviding the trial court with evidence sufficient to do so.

We are mindful of the difficulties which may arise whencourts allocate sanctions between represented parties andtheir attorneys. Litigation involving the allocation ofsanctions may pit attorney against client, as each tries toprove why the other is responsible for the sanctionableconduct. Disclosure of otherwise-privileged informationmay be an issue.

To avoid such a conflict of interest, however, othercourts have suggested that, where sanctions have beenimposed, and the attorney and client disagree about who

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is at fault and wish to assign blame to the other, theattorney should withdraw as client's attorney and bothshould obtain their own counsel. See e.g., Slane v. RioGrande Water Conservation Dist., 115 F.R.D. 61, 62(D.Colo.1987) (explaining that the court “recommendedthat [the attorney] withdraw from his representation of[his clients and] obtain counsel for himself”); AnschutzPetroleum Mktg. Corp. v. E.W. Saybolt & Co., 112 F.R.D.355, 360 (S.D.N.Y.1986) (explaining that if the attorneywished to contend that their client should pay all or partof the sanctions imposed, the attorney “will of course needto be represented by separate counsel”); *116 EastwayConstr. Corp. v. City of New York, 637 F.Supp. 558,570 (E.D.N.Y.1986) (stating that, “[i]f attorney and clientdisagree about who is at fault and point their fingers ateach other, the interests of the two are now clearly adverse.The client, therefore, will need new counsel to representhim against his former counsel in the proceedings todetermine fault”).

We agree with the trial court's conclusions that: (1)the plaintiffs “chose to advance at least three wildlyspeculative claims that lacked any basis in fact [and]dramatically increased the cost and duration of thelitigation”; and (2) the combination of “so many frivolousclaims, supported by such wild speculation, so virulentlyprosecuted even after any legitimate prospect of successhad vanished [demonstrates] that the claims ... were filedout of a vindictive and malevolent desire to injure andintimidate a business competitor.”

The plaintiffs argue that the trial court erred by not“apportioning the sanctions among [NVRE, Kivlighan,and Walpole] based on their respective conduct,” and thatWalpole “should be punished, not his clients,” because“[p]enalizing NVRE and Kivlighan for relying on theirtrial counsel does not further the goal of ... Code § 8.01–271.1 nor does it serve the ends of justice.” However,the trial court expressly found that “the record does notconform with Plaintiffs' theory of the case. Instead, there issubstantial evidence of sanctionable behavior on the partof both the litigants and the lawyer.”

Consequently, because both Walpole and the plaintiffsviolated Code § 8.01–271.1, and because the plaintiffsdid not provide evidence necessary to demonstrate properallocation of fault, we hold that the trial court did notabuse its discretion when it imposed sanctions against

NVRE, Kivlighan, and Walpole, jointly and severally inthis case.

E. The Terms and Quantum of the Sanctions

[14] Walpole argues the trial court erred in determiningthe terms and quantum of sanctions because it did notproperly consider: (1) the defendants' failure to mitigateby not filing a motion for summary judgment; (2) thedefendants' attorneys' billing practices; (3) the punitiveeffect of the award; and (4) the plaintiffs' ability to pay.We disagree.

[15] In reviewing a trial court's award of sanctions underCode § 8.01–271.1, we have held that a court's impositionof sanctions will **137 not be reversed on appeal “unlessthe court abused its discretion *117 in 1) its decisionto sanction the litigant, or 2) in the court's choice of theparticular sanction employed.” Switzer, 273 Va. at 331,641 S.E.2d at 83. It is important to state that this case is nota typical attorneys' fees award case. It is a sanctions casewherein the trial court has decided that a proper sanctionwould be based upon attorneys' fees incurred—a remedyexpressly provided in the statute. Code § 8.01–271.1. Ofcourse, proof of reasonableness is required. We drawguidance from our prior holdings regarding determinationof reasonableness of attorneys' fees. We have held that,

the fact finder must determine fromthe evidence the amount of thereasonable fees under the facts andcircumstances of each particularcase. The trier of fact must weighthe testimony of attorneys as to thevalue of the services, by referenceto their nature, the time occupiedin their performance, and otherattending circumstances, and byapplying to it their own experienceand knowledge of the character ofsuch services. On appeal the trialcourt's determination of the amountof the attorneys' fees to be awardedwill be set aside only upon a findingof abuse of discretion.

Holmes v. LG Marion Corp., 258 Va. 473, 479, 521 S.E.2d528, 533 (1999) (citations and internal quotation marksomitted).

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In this case, David S. Mercer (“Mercer”) testified forthe defendants as an expert in the “reasonableness [and]necessity in attorney's fees.” Specifically, Mercer testifiedthat “the fees are eminently reasonable and rationallyrelated to [this] case.” Mercer further testified that heconsidered the “time and effort expended by all counsel onbehalf of the defense, ... the nature of the services renderedand the complexity of those services,” and “the value ofthe services to the defendants and the results obtained,” inreaching his opinion. Also, Mercer testified that “the fees[in this case] were under market from [his] experience.”

James C. Brincefield, Jr. (“Brincefield”) testified forthe defendants as an expert “in the field of attorney'sfees, respectively with real estate litigation.” Brincefieldtestified that “the fees were reasonable and necessary forthe ... defense of this case.” Brincefield further testifiedthat he considered “the time and effort expended by theattorneys, the complexity of the case, the experience of theattorneys, the reasonableness of their rates compared tothe *118 rates of other lawyers in the area, and the subjectmatter of the case” in forming his opinion.

Significantly, the plaintiffs and Walpole stipulated as tothe reasonableness of the defendants' counsel's billing rate,and the trial court noted that “[t]he only question [that]remain[ed] [wa]s whether the number of hours spent on thecase was reasonable.” The trial court also noted that eachdefendant “provided the Court with the substantial legalbills that they incurred as a result of the litigation initiatedby Plaintiffs.”

Furthermore, in reaching its decision, the trial courtconsidered the necessary factors, including the facts andcircumstances of each particular claim, the testimony ofattorneys as to the value of the services, the nature ofthose services, the time occupied in their performance,and other attending circumstances, and applied its ownexperience and knowledge of the character of such servicesin reaching its decision. See Holmes, 258 Va. at 479, 521S.E.2d at 533. The trial court ultimately determined thatmost of the amount requested by the defendants wasreasonable and that awards of $113,778.06 in attorneys'fees to Martins and MAI, and $158,318.40 in attorneys'fees to the Gavins, were reasonable.

Notably, the trial court did find that certain fees wereunreasonable, including a small amount of fees related to a

counterclaim brought by the Gavins against the plaintiffs,certain fees connected to the number of hours counsel forthe Gavins spent in preparing jury instructions for trial,and certain instances of duplicative and excessive billing.

We hold that the trial court did not abuse its discretionin determining the amount of the award of sanctions,particularly in light of the trial court's findings that: (1) theplaintiffs and Walpole “violated [Code § 8.01–271.1] whenthey filed the Underlying Action **138 for an improperpurpose and without a proper basis in law and in fact”;and (2) “the appropriate sanction is to hold both Mr.Walpole and his clients jointly and severally liable for thereasonable attorney's fees and costs of Defendants.”

F. Walpole's Motion for a Suspending Order

[16] Walpole argues that the trial court erred when itdenied his motion for entry of a suspending order withouthearing oral argument thereon. We disagree.

*119 Rule 4:15(d) provides that, “[e]xcept as otherwiseprovided in this subparagraph, upon request of counselof record for any party, or at the court's request, thecourt shall hear oral argument on a motion.” The rule“otherwise provide[s]” that “argument on a motion forreconsideration ... shall be heard orally only at the requestof the court.” Rule 4:15(d).

On July 9, 2010, NVRE, Kivlighan, and Walpolefiled motions for entry of a suspending order withoutrequesting a hearing on those motions, stating that “theentry of a suspending order is necessary in order forPlaintiffs [and Walpole] to have adequate time to brief, fileand argue their motion[s] for reconsideration and for theCourt to consider and rule upon such ... motion [s].” Thetrial court denied both motions on July 12, 2010.

Walpole subsequently filed a motion for reconsiderationand renewed motion for entry of suspending order on July13, 2010, arguing that Walpole had “multiple groundsfor seeking reconsideration of the [trial c]ourt's rulings,”and “the entry of a suspending order is necessary in orderfor Walpole to have adequate time to fully brief andargue each point of reconsideration and for the Court toconsider and rule upon such a motion.” Walpole did notrequest a hearing on that motion. On July 15, 2010, thetrial court denied Walpole's motion for reconsideration

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and renewed motion for entry of suspending order, statingthat “Walpole has not raised any issues not alreadyconsidered in [this] matter.”

Walpole also filed a request for expedited hearing onJuly 15, 2010, in which he requested that the trial courtschedule an expedited hearing on the previously filedmotion for reconsideration and renewed motion for entryof suspending order “on or before July 20, 2010.” The trialcourt did not rule on this request before it lost jurisdictionover this suit pursuant to Rule 1:1.

We hold that the trial court did not err in denying bothWalpole's motion for a suspending order and Walpole'srenewed motion for a suspending order without a hearingbecause it does not appear that Walpole requested ahearing on either motion before the trial court deniedthose motions. Additionally, Walpole repeatedly statedthat he sought the suspension in order to file and arguea motion for reconsideration, for which Rule 4:15(d)

provides oral argument “only at the request of the court.”Rule 4:15(d).

*120 III. Conclusion

We hold that the trial court did not err when it imposedsanctions jointly and severally against NVRE, Kivlighan,and Walpole, pursuant to Code § 8.01–271.1. Accordingly,we will affirm the judgment of the trial court.

Record No. 101836—Affirmed.

Record No. 101844—Affirmed.

All Citations

283 Va. 86, 720 S.E.2d 121

Footnotes1 The relatively tortuous path of complaints, demurrers, motions, amended

complaints, and other pleadings is recited herein to illustrate why and howexpenses and legal fees ultimately accumulated.

2 Although the plaintiffs alleged that Donna Gavin signed the listing agreementwith NVRE for NVRE to sell the Kennedy property in exchange for a fivepercent commission of the sales price, the listing agreement signed by DonnaGavin provided for a two percent commission to be paid to the selling brokerand a three percent commission to be paid to the buyer's agency.

End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works.

8/22/2016 Rule 1.7: Conflict of Interest: Current Clients | The Center for Professional Responsibility

http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_7_conflict_of_interest_current_clients… 1/1

Rule 1.7: Conflict of Interest: Current Clients

Client­Lawyer RelationshipRule 1.7 Conflict Of Interest: Current Clients(a) Except as provided in paragraph (b), a lawyer shall notrepresent a client if the representation involves a concurrentconflict of interest. A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse toanother client; or

(2) there is a significant risk that the representation of one or moreclients will be materially limited by the lawyer's responsibilities toanother client, a former client or a third person or by a personalinterest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict ofinterest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able toprovide competent and diligent representation to each affectedclient;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim byone client against another client represented by the lawyer in thesame litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed inwriting.

Comment | Table of Contents | Next Rule

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§ 6086.7. Notification to State Bar of court actions,..., CA BUS & PROF §...

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West's Annotated California CodesBusiness and Professions Code (Refs & Annos)

Division 3. Professions and Vocations Generally (Refs & Annos)Chapter 4. Attorneys (Refs & Annos)

Article 5. Disciplinary Authority of the Board of Governors (Refs & Annos)

West's Ann.Cal.Bus. & Prof.Code § 6086.7

§ 6086.7. Notification to State Bar of court actions, judgments, sanctions, or civil penalties against attorneys

Effective: January 1, 2016Currentness

(a) A court shall notify the State Bar of any of the following:

(1) A final order of contempt imposed against an attorney that may involve grounds warranting discipline under thischapter. The court entering the final order shall transmit to the State Bar a copy of the relevant minutes, final order,and transcript, if one exists.

(2) Whenever a modification or reversal of a judgment in a judicial proceeding is based in whole or in part on themisconduct, incompetent representation, or willful misrepresentation of an attorney.

(3) The imposition of any judicial sanctions against an attorney, except sanctions for failure to make discovery ormonetary sanctions of less than one thousand dollars ($1,000).

(4) The imposition of any civil penalty upon an attorney pursuant to Section 8620 of the Family Code.

(5) A violation described in paragraph (1) of subdivision (a) of Section 1424.5 of the Penal Code by a prosecutingattorney, if the court finds that the prosecuting attorney acted in bad faith and the impact of the violation contributedto a guilty verdict, guilty or nolo contendere plea, or, if identified before conclusion of trial, seriously limited the abilityof a defendant to present a defense.

(b) In the event of a notification made under subdivision (a) the court shall also notify the attorney involved that thematter has been referred to the State Bar.

(c) The State Bar shall investigate any matter reported under this section as to the appropriateness of initiatingdisciplinary action against the attorney.

Credits(Added by Stats.1990, c. 483 (S.B.2066), § 2. Amended by Stats.2003, c. 469 (S.B.947), § 1; Stats.2015, c. 467 (A.B.1328),§ 1, eff. Jan. 1, 2016.)

§ 6086.7. Notification to State Bar of court actions,..., CA BUS & PROF §...

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Notes of Decisions (3)

West's Ann. Cal. Bus. & Prof. Code § 6086.7, CA BUS & PROF § 6086.7Current with urgency legislation through Chapter 117 of 2016 Reg.Sess., Ch. 8 of 2015-2016 2nd Ex.Sess., and allpropositions on the 6/7/2016 ballot.

End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works.