Category Archives: Sanctions

Sanctions?

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This is a cross-post from 600 Camp.

After recently addressing a party’s rights to oral argument in a dispute about enforcement of an arbitration award, the Fifth Circuit then returned to Sun Coast Resources v. Conrad to review the prevailing party’s motion for sanctions under Fed. R. App. 38 for a frivolous appeal.The Court observed:

    “[T]he case for Rule 38 sanctions is strongest in matters involving malice, not incompetence. And our decision on Sun Coast’s appeal was careful not to assume the former. As to the merits of its appeal—including the company’s failure to disclose that it cited Opalinski II rather than Opalinski I to the arbitrator—we observed that ‘[t]he best that may be said for Sun Coast is that it badly misreads the record.’ As to its demand for oral argument, we stated that ‘Sun Coast’s motion misunderstands the federal appellate process in more ways than one.’ Perhaps Sun Coast earnestly (if mistakenly) believed it had a valid legal claim to press. Or perhaps it was bad faith—maximizing legal expense to drive a less-resourced adversary to drop the case or settle for less. Or perhaps its decisions were driven by counsel. But we must resolve the pending motion based on facts and evidence—not speculation. We sympathize with Conrad . . . [b]ut we conclude that this is a time for grace, not punishment.”

No. 19-20058 (May 7, 2020) (citations omitted).

While the timing is coincidental, the case is an instructive companion to the Texas Supreme Court’s recent opinion in Brewer v. Lennox Hearth Products LLC, which reversed a sanctions award. That Court noted that “while the absence of authoritative guidance is not a license to act with impunity, bad faith is required to impose sanctions under the court’s inherent authority,” and this held that “the sanctions order in this case cannot stand because evidence of bad faith is lacking.” No. 18-0426 (Tex. April 24, 2020) (footnotes omitted).

Mandamus in sanctions dispute

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The Texas Supreme Court granted mandamus relief in a sanctions dispute in In re Casey, No. 18-0289 (Nov. 22, 2019), holding:

“In Braden v. Downey, we declined to consider the propriety of monetary sanctions by mandamus, holding instead that payment of monetary sanctions must be deferred until rendition of an appealable judgment if (1) the sanctioned party contends immediate payment would impair access to the courts and (2) the trial court does not promptly hold a hearing and make express written findings to the contrary. . . .

According to [real party in interest], Braden’s deferral mandate is implicated only when a sanctions award rises to the level of a penalty that impedes resolution of the case on the merits. While it is true that the monetary sanction in Braden significantly exceeded the opponent’s compensable attorney’s fees, Braden is not limited in th[at] way . . .

Braden’s focus is on the effect of a monetary sanction that must be paid before it can be
superseded and appealed, not on a specific amount or purpose of the sanction. . . . [A]n opposing party may be awarded sanctions before an appealable judgment is rendered, but neither Chapter 10 nor Rule 13 creates a right to payment before supersedeas is available. Braden concerns are implicated based on a sanction order’s requirement that the sanction be paid in advance of an appealable judgment,”