Travelers Insurance Company, Plaintiff-appellee, v. St. Jude Hospital of Kenner, La., Inc., et al., Defendants,kenneth C. Fonte, Defendant-appellant, 38 F.3d 1414 (5th Cir. 1994)

Kenneth C. Fonte, counsel for defendants, appeals the district court's imposition of sanctions against him under 28 U.S.C. § 1927 (multiplying proceedings "unreasonably and vexatiously"). We AFFIRM.

More than a year after judgment for Travelers Insurance Company (based on a jury verdict) was entered, see Travelers Ins. Co. v. St. Jude Hosp. of Kenner, La., Inc., 21 F.3d 1107 (5th Cir. 1994) (No. 92-09579; unpublished), defendants (Liljebergs)¹  moved to vacate it pursuant to Fed. R. Civ. P. 60(b) (6), claiming that, because of his membership in The Boston Club of New Orleans and other clubs, and other social contacts, the district judge had violated 28 U.S.C. § 455(a) by failing to disqualify himself from the underlying litigation, although he knew, or should have known, that his impartiality might reasonably be questioned.²  In denying the 60(b) (6) motion, the district court awarded sanctions, to include attorneys' fees, against Fonte, the Liljebergs' attorney, pursuant to 28 U.S.C. § 1927.³  The district court subsequently quantified the sanctions at $22,123.75.⁴ 

Fonte does not challenge the amount of sanctions, only their imposition.

By order entered on December 1, 1993, the district court amended its denial of the 60(b) (6) motion to include attorneys' fees as part of the Sec. 1927 sanctions. The order did not state that those sanctions were against Fonte. After Travelers moved to quantify the sanctions, the district court did so on March 30, 1994.

Fonte appealed only after the March order. Travelers suggests that, because Fonte did not appeal from the December 1993 order imposing sanctions, he can appeal only the amount, as set by the March 1994 order. Fonte replies that the December 1993 order was not directed "exclusively" to him; that only the March 1994 order directing him to pay Travelers obligated him to pay the sanctions.

Unlike Fed. R. Civ. P. 11, Sec. 1927 sanctions are, by the section's plain terms, imposed only on offending attorneys; clients may not be ordered to pay such awards. E.g., Browning v. Kramer, 931 F.2d 340, 344 (5th Cir. 1991). Therefore, when the district court referred solely to Sec. 1927 in its December 1993 order, sanctions were being imposed on Fonte, not the Liljebergs. This raises, however, the issue of whether that order was appealable.⁵  Although Fonte incurred sanctions under the December 1993 order, their amount was not determined until the March 1994 order. Thus, the December 1993 order was not an appealable order. Southern Travel Club, Inc. v. Carnival Air Lines, Inc., 986 F.2d 125, 131 (5th Cir. 1993) ("an order awarding attorney's fees or costs is not reviewable on appeal until the award is reduced to a sum certain"). Accordingly, we have jurisdiction to consider not only the amount, but also the underlying imposition, of sanctions. (As noted, Fonte does not challenge the former.)

Because Sec. 1927 sanctions are penal in nature, Monk v. Roadway Express, Inc., 599 F.2d 1378, 1383 (5th Cir. 1979), aff'd in relevant part sub nom. Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S. Ct. 2455, 65 L. Ed. 2d 488 (1980), and in order not to dampen the legitimate zeal of an attorney in representing his client, Sec. 1927 is strictly construed. Browning, 931 F.2d at 344. Therefore, before imposing such sanctions, a court must ensure that, pursuant to the plain terms of Sec. 1927, the offending attorney's multiplication of the proceedings was both "unreasonable" and "vexatious", Federal Deposit Ins. Corp. v. Conner, 20 F.3d 1376, 1384 (5th Cir. 1994); evidence of recklessness, bad faith, or improper motive must be present. Hogue v. Royse City, Tex., 939 F.2d 1249, 1256 (5th Cir. 1991).

Despite the strict limitations for imposing Sec. 1927 sanctions, their imposition and quantification are committed to the sound discretion of the court imposing them; we review only for abuse of that discretion. E.g., Topalian v. Ehrman, 3 F.3d 931, 934 (5th Cir. 1993); Trevino v. Holly Sugar Corp., 811 F.2d 896, 907-08 (5th Cir. 1987). In sum, in reviewing the imposition of sanctions, we do not substitute our judgment for that of the district court in enforcing acceptable standards of conduct. Topalian, 3 F.3d at 935.

The district court did not abuse its discretion in finding that the 60(b) (6) motion unreasonably and vexatiously multiplied the proceedings. The court's findings upon which it based the imposition of sanctions are well grounded.⁶  Additionally, the background and context of this litigation illuminate the district court's experience in dealing with Fonte.⁷ 

Fonte maintains that the district court exceeded its authority under Sec. 1927 by considering bankruptcy proceedings undertaken by two Liljeberg entities. See note 6, supra (findings p 4). In Matter of Case, 937 F.2d 1014 (5th Cir. 1991), we stated that Sec. 1927

limits the court's sanction power to attorney's actions which multiply the proceedings in the case before the court. Section 1927 does not reach conduct that cannot be construed as part of the proceedings before the court issuing Sec. 1927 sanctions.

Id. at 1023. Fonte's reliance upon Case is misplaced. There, we prohibited the district court from awarding fees incurred in a collateral state court proceeding. Here, the district court did not award Travelers fees it may have incurred in the bankruptcy proceedings. The references to those proceedings contributed to the district court's implicit determination that the 60(b) (6) motion was in bad faith, or undertaken with an improper motive.

Next, Fonte asserts that the 60(b) (6) motion did not protract the appeal on the underlying judgment, see note 6, supra (district court findings p 4); and that, therefore, sanctions were not in order. Needless to say, the motion "multiplie [d] the proceedings". 28 U.S.C. § 1927. Section 1927 is not limited to dilatory tactics; the issue for the district court is whether counsel unreasonably and vexatiously multiplied the proceedings.

Fonte contends also that, before imposing sanctions, the district court denied him notice and an opportunity to be heard, thus denying him due process. See Roadway Express, 447 U.S. at 767, 100 S. Ct. at 2464 ("attorney's fees should not be assessed lightly or without fair notice and an opportunity for a hearing on the record").

Despite his assertions, Fonte received notice that the court was considering sanctions. Before requesting them, Travelers notified Fonte by certified letter, with copy to the district judge, that it considered the 60(b) (6) motion to be in violation of both Fed. R. Civ. P. 11 and Sec. 1927. And, in its opposition to the 60(b) (6) motion, Travelers requested sanctions. This satisfied the notice requirements of due process. In re Perry, 918 F.2d 931, 935 (Fed. Cir. 1990), cert. denied, --- U.S. ----, 112 S. Ct. 49, 50, 116 L. Ed. 2d 27 (1991).

Nor did the district court's failure to hold a hearing violate Fonte's due process rights. " [T]he right to a hearing ... is limited to cases where a hearing would assist the court in its decision." Hill v. Norfolk & W. Ry., 814 F.2d 1192, 1201 (7th Cir. 1987). "Where the sanctionable conduct occurred in the presence of the court, there are no issues that a hearing could illuminate and hence the hearing would be pointless." Kapco Mfg. Co. v. C & O Enters., Inc., 886 F.2d 1485, 1495 (7th Cir. 1989); accord Hill, 814 F.2d at 1202. Fonte does not contend that any factual dispute exists with respect to his actions for which Sec. 1927 sanctions were imposed; those actions appear in the record and briefs before the district court. A hearing would not have developed or clarified Sec. 1927 issues. Furthermore, by having presided over the underlying action, as well as related actions, the district court was most familiar with Fonte, the parties, and the litigation. See Travelers Ins. Co. v. St. Jude Medical Office Bldg., Ltd. Partnership, 843 F. Supp. 138, 156 n. 6 (E.D. La. 1994). See also United States v. Nesglo, Inc., 744 F.2d 887 (1st Cir. 1984) ("another factor that militates towards finding that a hearing was unnecessary is the degree of familiarity the court had with the parties and the litigation").

Finally, Fonte maintains that the district court should have employed Rule 11, not Sec. 1927, thus entitling him to the Rule's procedural safeguards. There is nothing in the sanctioning provisions which mandates that a court must consider Rule 11 before Sec. 1927. See Chambers v. NASCO, Inc., 501 U.S. 32, 50, 111 S. Ct. 2123, 2135, 115 L. Ed. 2d 27 (1991) (a court is not forbidden from sanctioning bad-faith conduct under its inherent powers simply because that conduct could also be sanctioned under Sec. 1927 or the Federal Rules of Civil Procedure). The decision whether to use Sec. 1927, or Rule 11, or both, is within the discretion of the district court; no abuse of that discretion is present.⁸ 

For the foregoing reasons, the district court's imposition of sanctions, to include their amount, is

AFFIRMED.