When Counsel Screws Up: the Imposition and Calculation of Attorney Fees as Sanctions

• Jurisdiction: United States,Federal
• Citation: Vol. 33 No. 02
• Publication year: 2009

SEATTLE UNIVERSITY LAW REVIEWVolume 33, No. 2WINTER 2010

WHEN COUNSEL SCREWS UP: THE IMPOSITION AND CALCULATION OF ATTORNEY FEES AS SANCTIONS

Philip Talmadge,(fn*) Emmelyn Hart-Biberfeld,(fn**) Peter Lohnes(fn***)

I. Introduction

While a body of law has emerged in Washington that permits the courts to impose fees against a party or the party's counsel as a sanction, that body of law has not been coherently examined in the academic setting nor carefully and consistently analyzed in the case law.(fn1) Sanctions can be imposed at any stage of the litigation. For instance, sanctions may be imposed for filing a baseless lawsuit or defense,(fn2) for filing a frivolous appeal,(fn3) or for abusing the discovery process.(fn4)

To compound the problem of a lack of rigor in the analysis of sanctions, the law relating to the calculation of the appropriate fee to be imposed as a sanction is even less certain. In Washington, the courts tend to favor the lodestar approach when calculating fee awards. Under the lodestar methodology, the court must: (1) determine the reasonable number of hours expended to secure a successful recovery for the client; (2) determine the reasonableness of the attorney's hourly rate; and then (3) multiply the reasonable hourly rate by the reasonable number of hours incurred, retaining the discretion to adjust the amount upward or downward as justice requires.(fn5)

While the Washington Supreme Court has warned that the lodestar method is not applicable in every situation,(fn6) Washington courts have inconsistently applied the method in situations where a party or attorney is being sanctioned for misconduct, leading to confusion as to how fees should be calculated when sanctions are warranted.(fn7) In the absence of some articulable standard for calculating fees as sanctions, courts may feel free to award insufficient or excessive fees unconnected to the actual expense imposed by the sanctionable conduct upon the opposing party or attorney.

This Article explores and clarifies the principles underlying the imposition of attorney fees as a sanction, providing an overview of the various ways in which attorneys can be sanctioned when they screw up. The Article discusses Washington law as it applies to sanctions and briefly analyzes how Washington courts look to comparable federal law for guidance. Part II begins by analyzing Washington Civil Rule (CR) 11, which prohibits baseless filings at the trial court level. Part III turns to sanctions under RCW 4.84.185. Part IV addresses sanctions under the Rules of Appellate Procedure, and then Part V discusses sanctions related to the discovery process. The Article concludes by arguing that much of the confusion surrounding the calculation of attorney fees as a sanction will be resolved by applying the lodestar method in all four areas of the law.

II. An Overview of CR 11

CR 11 was adopted "to deter baseless filings and to curb abuses of the judicial system."(fn8) It applies to every pleading, written motion, and legal memorandum filed or served during the litigation. CR 11 is not available, however, if another, more explicit court rule applies.(fn9) The rule does not apply in appellate proceedings; instead, the appellate courts apply a similar standard under Rules of Appellate Procedure (RAP) Rule 18.9(a).(fn10)

CR 11 requires an attorney to sign pleadings, motions, or legal memoranda. An attorney's signature certifies that the attorney believes, after "an inquiry reasonable under the circumstances," that the pleading, motion or legal memorandum is: (1) well grounded in fact; (2) warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law or the establishment of new law; and (3) not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.(fn11) Furthermore, the attorney's signature certifies that "the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief."(fn12) If an attorney signs a pleading, motion, or legal memorandum in violation of the rule, the court may impose an "appropriate sanction" against the attorney, the represented person, or both.(fn13) A court may impose sanctions pursuant to motion or on its own initiative.(fn14)

The party moving for sanctions bears the burden to justify the re-quest.(fn15) In addition, the party seeking sanctions under CR 11 should notify the offending party of the objectionable conduct and provide that person with an opportunity to mitigate the sanction by amending or withdrawing the paper.(fn16) The counterpart federal rule provides a party with a twenty-one day safe harbor period during which the challenged pleading may be withdrawn.(fn17)

Washington courts have developed criteria to determine whether the imposition of sanctions is appropriate. In Miller v. Badgley,(fn18) the court of appeals introduced a test to determine when a court may impose CR 11 sanctions.(fn19) The court explained that sanctions under CR 11 may be imposed if any one of three conditions are met: (1) the attorney failed to conduct a reasonable inquiry into the facts supporting the paper; (2) the attorney failed to conduct a reasonable inquiry into the law to ensure that the pleading filed is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and (3) the attorney filed the pleading for an improper purpose such as delay, harassment, or to increase the costs of litigation.(fn20) In Blair v. GIM Corp.,(fn21) the court of appeals further explained that a filing is baseless only if it is not well grounded in fact, or not warranted by existing law or a good faith argument for the alteration of existing law.(fn22) These cases provide the necessary framework to determine whether the imposition of sanctions is appropriate.

In 2005, the Washington Supreme Court amended CR 11.(fn23) The amended rule permits attorneys to advance legal arguments seeking a good faith establishment of new law without risking sanctions.(fn24) It also authorizes the imposition of sanctions for baseless denials of factual contentions, like those found in answers.(fn25) These amendments make CR 11 more closely parallel Federal Rules of Civil Procedure 11 (Rule 11). Moreover, the rule now reflects the three conditions outlined in Miller.(fn26) Nonetheless, the courts remain divided over whether a finding that one of these conditions has been met is enough to satisfy the rule or whether a finding that all three conditions have been met is required before sanctions can be imposed.(fn27)

At a minimum, CR 11 requires attorneys to undertake a reasonable inquiry into the facts and the law before filing any pleading. The rule "requires attorneys to stop, think, and investigate more carefully before serving and filing papers."(fn28) It was intended to deter the "shoot-first-and-ask-questions-later" approach to the practice of law.(fn29) The following subsections examine aspects of the rule in greater detail.

A. Attorneys Must Make a Reasonable Inquiry into the Law and the Facts

While CR 11's mandate is ongoing throughout the litigation,(fn30) sanctions are not appropriate merely because an action's factual basis ultimately proves deficient or a party's view of the law proves incor-rect.(fn31) Similarly, sanctions against an attorney are not warranted merely because the trier of fact found the attorney's client not credible.(fn32)

Because there are instances where the imposition of sanctions is inappropriate, courts must carefully evaluate whether an attorney's inquiry into the law and the facts was reasonable. Washington courts evaluate the reasonableness of the attorney's pre-filing inquiry under the objective standard of "'reasonableness under the circumstances."(fn33) In making this determination, the courts may consider such factors as:[T]he time that was available to the signer, the extent of the attorney's reliance upon the client for factual support, whether a signing attorney accepted a case from another member of the bar or forwarding attorney, the complexity of the factual and legal issues, and the need for discovery to develop factual circumstances underlying a claim.(fn34)

In Cascade Brigade v. Economic Development Board for Tacoma-Pierce County,(fn35) the court of appeals mentioned additional factors to be considered when determining the reasonableness of an attorney's pre-filing inquiry: "The knowledge that reasonably could have been acquired at the time the pleading was filed, the type of claim and the difficulty of acquiring sufficient information, which party has access to the relevant facts, and the significance of the claim in the pleading as a whole."(fn36) Relying on the client for the facts may not be sufficient to satisfy the requirements of CR 11.(fn37) Moreover, an attorney's subjective belief about the veracity of the pleading is irrelevant.(fn38)

B. Attorneys May Not File Pleadings for an Improper Purpose

CR 11 sanctions are appropriate if the pleading is filed for an improper purpose. For example, in Suarez v. Newquist,(fn39) the attorney attempted to file multiple affidavits of prejudice.(fn40) After the trial court rejected the affidavits, the attorney then attempted to file an affidavit of his own.(fn41) After the trial judge rejected that affidavit...