On February 11, 2015, the Seventh Circuit issued two opinions sanctioning Wendy A. Nora, a foreclosure defense attorney. The first case is captioned In Re: Desa L. Rinaldi and Roger P. Rinaldi, Nos. 13-3865 & 14-1887 and Wendy A. Nora and HSBC Bank, USA, N.A., et al.
In 2009, HSBC filed a mortgage foreclosure suit against the Rinaldis in state court. The Rinaldis “counterclaimed against HSBC, Wells Fargo, and the lawyers involved in the foreclosure, alleging that the mortgage paperwork produced by HSBC had been fraudulently altered and that HSBC lacked standing to enforce the mortgage.” Opinion at 2. The Rinaldis lost the state court case and did not appeal. However, when HSBC agreed to modify the loan rather than foreclose, the state court vacated the judgment. The Rinaldis then refiled the same counterclaims against the same parties they previously sued. Those proceedings were halted when the Rinaldis filed a bankruptcy petition, which had the effect of automatically staying the state case.
In the bankruptcy case HSBC filed a proof of claim and the Rinaldis filed adversary claims against HSBC, Wells Fargo and the lawyers involved. After the bankruptcy court and district court rejected the claims the Rinaldis, through their lawyer, filed a Rule 59(e) motion to alter or amend judgment. That motion was denied and the court admonished the Rinaldis and their lawyer that “‘any further frivolous submissions will result in an award of appropriate sanctions against the Rinaldi’s attorney.'”
In December 2013, the Rinaldis appealed to the Seventh Circuit. However, in March 2014 they moved to dismiss the bankruptcy case on the ground that they had newly discovered evidence that the mortgage was void. The bankruptcy court granted the motion. Nora then moved to withdraw as the attorney for the Rinaldis. Nora moved to intervene in the case and sought relief under Rule 60(b). The district court imposed sanctions for motions it deemed “frivolous.” The sanction was modest – $1,000. Nora appealed that sanctions order, but the Seventh Circuit affirmed. The Seventh Circuit noted that the appeal on the merits was moot (because the bankruptcy petition had been dismissed) but held that because the Rinaldis had caused the appeal to become moot, the decisions of the bankruptcy court and district court would have preclusive effect.
The court also affirmed the $1,000 sanction on the ground that the attorney’s filings were “confusing, frivolous, and needlessly argumentative.”
The second opinion released on February 11, 2015 was In Re: Wendy A. Nora, No. 13-2676, in which the Seventh Circuit addressed its order that Nora “show cause why she should not be sanctioned for pursuing a frivolous appeal,…and why she should not be disciplined for conduct unbecoming a member of the bar.” The court ordered Ms. Nora to pay a sanction of $2,500 but decided to suspend the sanction “until such time, if ever, that Nora submits additional frivolous or needlessly antagonistic filings.” The court held that Nora had raised frivolous arguments in the case captioned, PNC Bank, N.A. v. Spencer, 763 F.3d 650 (7th Cir. 2014). The Spencer case was another foreclosure case that had been removed to the federal court after four years of litigation in state court. After the case was remanded for lack of subject matter jurisdiction, Nora filed an appeal to the Seventh Circuit. The appeal was frivolous because there was no right to appeal a remand and because there was no colorable basis to assert federal jurisdiction. The court also discussed Nora’s “needless antagonism” towards opposing counsel and the judge.
Comment: the fact that two opinions were published on the same day concerning the same lawyer has to be the Seventh Circuit’s way of politely warning members of the foreclosure bar to resist the temptation to engage in frivolous litigation.
Edward X. Clinton, Jr.
fedcivilprocedure 