96 Cal. Daily Op. Serv. 356, 96 Daily Journal D.A.R. 565 Michael L. Salstrom, and Gregory Lamont Gudger v. Citicorp Credit Services, Inc. Financial Assistance Incorporation, a Washington Corporation Continental Credit, a Washington Corporation Larry Aldi Gus Carlson Citibank (South Dakota) Na, a South Dakota Corporation, Michael L. Salstrom, and Dean Browning Webb v. Citicorp Credit Services, Inc. Financial Assistance Incorporation, a Washington Corp.
Docket: 94-35816
Court: Court of Appeals for the Ninth Circuit; January 16, 1996; Federal Appellate Court
Gregory Lamont Gudger and Dean Browning Webb appeal the imposition of monetary and nonmonetary sanctions by the district court under 28 U.S.C. § 1927 and the court's inherent power, arguing that the denial of Rule 11 sanctions precludes such actions. The Ninth Circuit disagrees, affirming the district court's decision, clarifying that findings under Rule 11 do not limit the court's authority to impose sanctions under § 1927. The court distinguishes its interpretation from the Eighth Circuit's ruling in N.A.A.C.P. Special Contribution Fund v. Atkins, stating that while the Eighth Circuit requires a finding of objectively unreasonable behavior for § 1927 sanctions, the Ninth Circuit only requires a finding of bad faith, which is assessed subjectively. Gudger and Webb also challenge the sufficiency of the district court's finding of bad faith necessary for sanctions under both § 1927 and the court’s inherent power. The court confirms that such findings were adequately supported. The court found bad faith based on three key factors: the volume and length of pleadings, the timing of filings, and the substantive nature of the claims, which transformed a straightforward debt collection case into a complex legal battle. Gudger and Webb's argument that no individual factor justified the bad faith finding was rejected; it was the combination of these factors that led to the imposition of sanctions, which the court deemed appropriate and not an abuse of discretion. Gudger and Webb argued that the sanctions imposed under Section 1927 were improper postjudgment retribution, referencing *In re Yagman*. They interpreted Yagman as prohibiting sanctions until after trial; however, the court clarified that while immediate sanctions are endorsed, it does not rule out the option of waiting until trial concludes in certain circumstances where misconduct’s full impact isn't immediately clear. The district court appropriately assessed the attorney's fees and costs related to the misconduct, concluding that at least 30% of the defense costs stemmed from Gudger and Webb's actions, which aligns with precedent set in *Hudson v. Moore Business Forms, Inc.*. The court affirmed that the sanctions were not improper retribution. Lastly, Gudger claimed the court erred by not individually allocating responsibility for wrongdoing. However, the district court had determined that both Gudger and Webb were equally responsible, dividing the sanction award equally between them. The decision was affirmed, with the panel agreeing that no oral argument was necessary for resolution.