If you are a regular reader of the weekly Compliance Digest, you will no doubt recall that many attorneys over the years have cautioned that seeking sanctions against plaintiff’s attorneys is usually money wasted because it’s nearly impossible to prove that an attorney was working in bad faith. The Court of Appeals for the Fourth Circuit has affirmed a District Court’s order granting sanctions against a collection attorney who had sued the attorneys representing the plaintiffs in a separate lawsuit filed against a pair of collection attorneys and their firm.
A copy of the ruling in the cases of Andrews & Lawrence Professional Services v. Alexa Bertinelli, Civil Justice, Richard Scott Gordin, and Gordon Wolf & Carney and Torin Andrews and Kary Lawrence v. Alexa Bertinelli, Civil Justice, Richard Scott Gordin, and Gordon Wolf & Carney can be accessed by clicking here.
Homeowners filed a class-action lawsuit against their homeowners associations that challenged the use of promissory notes containing confessed judgment clauses used by the HOAs to resolve disputes over unpaid fees. Andrews and Lawrence were the collection attorneys hired by the HOAs.
While the case was proceeding, the Maryland Court of Appeals ruled that state law prohibited the use of promissory notes containing confessed judgments to collect delinquent HOA fees. The plaintiffs reached settlements with the HOAs, but did not settle with the collection attorneys Andrews and Lawrence.
The collection attorneys turned around and filed a suit of their own, accusing the plaintiff’s attorneys of engaging in a civil conspiracy by soliciting clients to sue the HOAs. The plaintiff’s attorneys filed a motion for judgment on the pleadings and sanctions against the collection attorneys, and a District Court judge granted the motion, awarding the plaintiff’s attorneys $27,349 in fees and costs.
The collection attorneys appealed the ruling, but the Fourth Circuit agreed with the District Court judge that the complaint “contained wholly conclusory claims — unsupported by factual allegations, unwarranted by existing law or a nonfrivolous argument for extending the law, and filed to harass, delay, and increase the costs of the already-protracted litigation.”
On top of that, based on the Appeals Court ruling prohibiting the use of confessed judgments, the plaintiff’s attorneys were justified in challenging the legality of the promissory notes, the Appeals Court determined.
