Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit

9-9-2004

Beam v. Bauer Precedential or Non-Precedential: Precedential

Docket No. 03-1874

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Recommended Citation "Beam v. Bauer" (2004). 2004 Decisions. Paper 284. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/284

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THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT (Filed September 9, 2004) ___________ Donald A. Bailey, Esq. Nos. 03-1874, 03-2194 4311 North 6th Street ___________ Harrisburg, PA 17110 Counsel for Appellant BEVERLY BEAM, Appellant, Melinda B. Kaufmann, Esq. Stock & Leader v. 221 West Philadelphia Street Susquehanna Commerce Center MARC BAUER; GLENN W . East Building ZEHNER; CAPITAL AREA York, PA 17404 INTERMEDIATE UNIT; SCOTT Counsel for Appellees Bauer, Zehner, DOWNEY; ROGER MORRISON; Capitol, and Downey DAVID L. GRAYBILL; MICHAEL SWEGER Kathryn L. Simpson, Esq. Mette, Evans & Woodside ___________ 3401 North Front Street P.O. Box 5950 Harrisburg, PA 17110-0950 ON APPEAL FROM THE UNITED Counsel for Appellee Morrison STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF Spero T. Lappas, Esq. PENNSYLVANIA Melanie L. Erb, Esq. Serratelli, Schiffman, Brown & Calhoun (D.C. Civil No. 02-cv-01797) 2080 Linglestown Road District Judge: The Honorable Suite 201 Sylvia H. Rambo Harrisburg, PA 17101-9445 Counsel for Appellees Graybill and ___________ Sweger

Submitted Under Third Circuit LAR 34.1(a) January 30, 2004 *H onorable Thomas N. O’Neill, Jr., Senior District Judge for the United States District Court for the Eastern BEFORE: NYGAARD and FUENTES, District of Pennsylvania, sitting by Circuit Judges, and designation. ___________ dismissed. The District Court dismissed Beam’s first lawsuit for failure to state a OPINION claim upon which relief could be granted. ___________ We affirmed. Beam v. Downey,

(3d Cir. 2002). But, while the first case was pending on appeal, Beam NYGAARD, Circuit Judge. filed a second suit. The second suit added Judge Sylvia Rambo, of the United additional defendants, a few new legal States District Court for the M iddle theories, but still contained nothing of Dis tri c t o f P e n n s yl v a n i a, f o u nd substance or merit. In its opinion plaintiff/appellant’s claim to be barred by explaining the dismissal order, the District the res judicata doctrine; she further Court found that Beam’s second complaint concluded that the suit was frivolous, and was “intended to harass, cause unnecessary then dismissed it. She also imposed Rule and needless increase in the cost of 11 sanctions on plaintiff’s attorney, Don litigation, . . . that factual contentions have Bailey, who was also appellant’s counsel no evidentiary support . . . that the claims on appeal. On Beam’s appeal challenging and legal contentions . . . are not warranted the dismissal and the sanctions, counsel by existing law nor by non-frivolous failed to offer any argument, facts, or law argument for the extension, modification, to show that the claim was not frivolous, or reversal of existing law or for the or that the Court had in some way erred. establishment of new law.” Memorandum H e n c e , w e affirmed, conclud ing and Order of the District Court (Mar. 25, additionally in our opinion that the appeal 2003). The District Court also ordered was also frivolous. Appellees now ask Beam’s attorney, Don Bailey, and his law that we award damages pursuant to firm to pay Rule 11 sanctions to the Federal Rule of Appellate Procedure 38, to appellees. These findings and conclusions compensate them for the financial loss were fully supported by the record, so we they incurred defending the dismissal affirmed. Beam v. Bauer, 88 Fed. Appx. order. The request presents us with three 523 (3d Cir. 2004). issues: Should we award damages? If so, The decision whether to appeal from an in what amount? And, against whom? We order of the District Court is not a matter will award damages in the amounts to be taken lightly by either a losing party requested by the various appellees under or her counsel. An appeal is not just the Rule 38, and against counsel for appellant. procedural next step in every lawsuit. A brief procedural history of this, and Neither is it an opportunity for another an earlier lawsuit filed by Beam, is both “bite of the apple,” nor a forum for a instructive and germane to the issue in this losing party to “cry foul” without legal or motion. Beam has twice brought lawsuits factual foundation. An appeal is a serious that the District Court summarily matter because it is a claim of error by the

2 District Court and an attack on the validity (3d Cir. 1990) (citing the Advisory of its order. Consequently, if the appeal is Committee Note to Rule 38). wholly lacking in merit, there are The rationale of Rule 38 is simply that consequences. Appellant herein now when parties suffer pecuniary loss by must face them. paying attorney fees to defend a valid Rule 38 states that “[i]f a court of judgment against a frivolous appeal, they appeals determines that an appeal is are as entitled to be awarded damages as is frivolous, it may, after a separately filed a victim seeking compensation for any motion or notice from the court and other financial loss incurred by the acts of reasonable opportunity to respond, award a tortfeasor. It is a rule designed to make just damages and single or double costs to whole a party victimized by needlessly the appellee.” Fed. R. App. P. 38. Of having to expend money for attorney fees course, we recognize that not every claim to protect a valid judgment from a baseless dismissed as frivolous is frivolous. attack. That is precisely what has D i st r ic t C ourts oc casio nally err. happened in this matter. Nonetheless, we state with equal emphasis Recently, when discussing Rule 38 that an appeal from a frivolous claim is damages, we cautioned counsel that a likewise frivolous. See A-Abart Elec. finding by a District Court that a lawsuit is Supply, Inc. v. Emerson Elec. Co., 956 frivolous should serve as notice to the F.2d 1399, 1407 (7th Cir. 1992). It is parties and their attorney to exercise counsel’s responsibiliy to make the caution, pause, and “devote additional distinction. examination to the legal validity and Although often mistakenly referred to factual merit of his contentions.” Huck, as both, an award under Rule 38 is neither 106 F.3d at 52. Here, despite many cues a sanction nor a punishment. Huck v. from us and the District Court that her Dawson,

(3d Cir. 1997) cause was wholly meritless, Beam and her (“Rule 38 is not a sanctions provision.”). counsel have persisted before the District Nor is appellant’s intent a consideration. Court and again before us. Additionally, Appellant is like any other tortfeasor. It as we noted in our opinion in Beam v. does not matter whether she filed this Bauer, “[i]n her haste to file [this] lawsuit, appeal out of malice, ignorance, or deceit; Beam disregarded the then-pending appeal it is the merit of her argument on appeal before this Court. Beam would have been that determines whether she carries the well-advised to await our opinion, which day. It is not a punitive provision. ultimately affirmed the result in the first “Damages [under Rule 38] are awarded by case.”

(3d Cir. the court in its discretion . . . as a matter of 2004). Our affirmation of the District justice to the appellee.” See Hilmon Co. Court’s first dismissal was lost on counsel, (V.I.) Inc. v. Hyatt Int’l,

, 253 who had already filed the second suit. Had counsel been paying attention, our result

3 could have given him notice of the fact damages upon counsel when a frivolous that he had failed to discern on his own; appeal stems from counsel’s professional that his client’s claims were wholly error. See Nagle v. Alspach,

, without legal or factual substance. We 145 (3d Cir. 1993); see also A-Abart, 956 thus will award damages to appellees. F.2d at 1407. In her response to the request for In Hilmon we set this standard: damages, Beam does not raise an issue as [A]ttorneys have an affirmative to the propriety of the amount of damages obligation to research the law and requested. Moreover, because this is a to determine if a claim on appeal damage issue, and because there is neither [has merit]. We conclude that if anything shocking in the amount counsel ignore or fail in this requested, nor do the fees appear at all obligation to their client, they do so inflated, there is no need for us to raise an at their peril and may become issue as to the amount sua sponte. Simply personally liable to satisfy a Rule stated, appellees have incurred costs and 38 award. The test is whether, expenses defending a valid judgment following a thorough analysis of against a frivolous appeal, and are entitled the record and careful research of to be made whole. Hence, we will award the law, a reasonable attorney damages in the amount expended by would conclude that the appeal is appellees. frivolous. Having decided that both the claim for Hilmon,

. fees and the statement ad damnum are proper, we must determine whether to In this case it would have been obvious place the responsibility for payment with to a reasonable attorney that an appeal Beam, her counsel, or both. Beam “had a from the District Court’s order was right to rely upon [her] attorney for sound frivolous, unless he had law or facts to advice.” Hilmon,

. support a conclusion that the District Court Although an unrepresented litigant should judge had erred. By failing to appreciate not be punished with damages for his this, Beam’s counsel exposed himself to failure to appreciate legal subtleties in personal liability for Rule 38 damages. legal arguments, Hughes v. Rowe, 449 Moreover, in his response to the motion U.S. 5, 15 (1980), we have consistently for damages, counsel presents no reason to held represented clients, and specifically conclude that the responsibility for the their counsel, to a higher standard. appeals lies anywhere but with him. Moreover, because it would be unfair to Hence, we conclude that it is appropriate charge a damage award against a party that counsel bear the burden of paying the who has relied upon her counsel’s damages. expertise in deciding whether to appeal, we have routinely imposed Rule 38

4 Finally, counsel for Beam contends in a motion to strike the appellees’ Rule 38 motion that Beam is entitled to an evidentiary hearing. We disagree. In her response to the motion for Rule 38 damages, Beam raises no evidentiary issues that would indicate to us any need for a hearing to find facts. We will deny Beam’s motion to strike. In sum, and upon consideration of the appellees’ motions, the appellant’s opposition thereto, and a thorough review of the record, we will award damages to appellees’ in the amounts requested, all in accord with the attached order.

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