Month: October 2017

Patient’s Truth in Lending Claim Against Surgeon Was Frivolous – Rule 11 Sanctions Awarded


The plaintiff entered into an agreement with the defendant for one of its doctors to repair a torn ACL in his knee. The agreement provided that the plaintiff would pay installment payments until the balance due was satisfied.

After the surgery, the plaintiff filed a Truth in Lending claim against the Defendant surgery practice. The Court found several bases under which Rule 11 sanctions were appropriate. First, the court noted that the plaintiff alleged that he paid some of the installment payments from his bank account. This allegation was false. The court notes:

As discussed in more detail below, Plaintiff’s counsel had no grounds to make these allegations, when simple investigation would have revealed that Defendant never received any further payment from Plaintiff because Plaintiff did not have sufficient funds in his bank account. Nonetheless, Plaintiff’s counsel brought Plaintiff’s claims not only on behalf of Plaintiff, but also alleged that Plaintiff could serve as an adequate representative of “a class of similarly-situated individuals” who suffered supposed injuries because “Defendant used these very same tactics on tens of other consumers . . . .” (Id. ¶¶ 5, 44).

The court held telephone conference with the lawyers and the plaintiff’s lawyer made further admissions detrimental to the case. The court found these admissions revealed that the case had no merit and that plaintiff’s counsel had not done any investigation to determine whether TILA applied.

Again the court explains:

These statements by Plaintiff’s counsel: (1) contradicted the factual allegations that Plaintiff had made further payments; (2) confirmed the allegation in paragraph 22 of the Complaint, cited above, that Plaintiff did not provide “written authorization” for any further payment; and (3) supports the Court’s conclusion that there was no “written agreement,” and that the arrangement between Plaintiff and Defendant was not an “extension of credit,” as required by law.

The statements by Plaintiff’s counsel above indicated that counsel may have secured Plaintiff’s financial records of his financial transactions with the Defendant, as had been ordered on October 28, 2016. Nonetheless, as further discussed below, later events showed that Plaintiff’s counsel had not done this.

On December 22, 2016, the Court dismissed the Complaint with prejudice[5] and sua sponte instituted Rule 11 proceedings to determine whether sanctions should be imposed against Plaintiff and/or his counsel. (ECF 23). In its Order, the Court stated its conclusion that “Plaintiff’s counsel filed this lawsuit without any regard to the requirements of the statute or the implementing regulations . . . [T]he lack of a finance charge or written agreement precludes any claims under TILA, as a matter of law.” 2016 WL 7411527.

Even at the time of the sanctions hearing, plaintiff’s counsel had not obtained the financial records necessary to prove up the claim.

The court found that plaintiff’s counsel had not done any investigation of the claim and concluded:

The Court finds that Plaintiff’s counsel violated Rule 11. There was no reasonable or suitable investigation by Plaintiff’s counsel as required under the standards of Rule 11. Under statutory language, regulations, and precedential opinions of the Third Circuit and other courts, there was no reasonable or legal basis to allege a “written agreement” or “extension of credit” under TILA and Regulation Z, individually or as a class action, particularly if a reasonable investigation had been conducted. Several complaint allegations were false, because of the failure to investigate.

Comment: this is a classic sanctions case in which the plaintiff’s attorney failed to conduct any investigation to determine if the claims had merit.

Source: WOLFINGTON v. RECONSTRUCTIVE ORTHOPAEDIC ASSOCIATES II, PC, Dist. Court, ED Pennsylvania 2017 – Google Scholar

Federal Attack on Foreclosure Judgment Merits Rule 11 Sanctions 


A district judge in the Northern District of Illinois has awarded sanctions to several banks who were sued in a federal case arising out of a state court foreclosure judgment. Plaintiff lost the state case and the state court entered a judgment of foreclosure in favor of banks who held mortgage liens on the property.

Because the state court issued a final judgment adverse to plaintiffs, plaintiffs’ counsel violated Rule 11 by filing a federal action to stop the foreclosure. Plaintiffs should have known their legal position was frivolous because federal courts in such cases, abstain from proceeding under the Rooker-Feldman doctrine. Plaintiffs’ counsel was sanctioned in the amount of $20,000.

Source: MOMO ENTERPRISES, LLC v. BANCO POPULAR OF NORTH AMERICA, Dist. Court, ND Illinois 2017 – Google Scholar

District Court Awards Sanctions To Prisoner


A prisoner who sued the Illinois Department of Corrections has obtained an award of Rule 37 sanctions. The district court held that the Department of Corrections failed to produce relevant documents and then violated a court order to produce those same documents. The court found that there was no bad faith by the Department of Corrections. Instead, it was a simple case of negligence. The court entered an order granting the motion, requiring production of the documents and requiring the Department to present the Warden for a second deposition. Additionally, appointed counsel had leave to submit a fee petition.

Source: Cozad v. Illinois Department of Corrections, Dist. Court, CD Illinois 2017 – Google Scholar