U.S. Fourth Circuit - The FindLaw 4th Circuit Court of Appeals Opinion Summaries Blog

Court Affirms $150,000 in Sanctions Against Lawyers

A federal appears court affirmed $150,000 in sanctions against three lawyers for egregious behavior in misleading a court.

In Six v. Generations Federal Credit Union, the U.S Fourth Circuit Court of Appeals said the attorneys' actions formed a "mosaic of half-truths, inconsistencies, mischaracterizations, exaggerations, omissions, evasions and misimpressions created by their own conduct."

The attorneys' conduct evinced "lack of candor," "affirmative misrepresentation," and "disrespect for the judicial process," the appeals panel said. Did we mention "egregious"?

Egregious

The case stemmed from a payday loan. James Dillon borrowed $2,525 from online lenders, Western Sky.

The lender charged him $11,332.12 in interest -- an interest rate of 139 percent -- over 48 months. Attorneys Stephen Six, Austin Moore, Darren Kaplan, and others represented Dillon in a class action lawsuit against the lender.

From the beginning, the lawyers played "hide the ball" from the trial court. It was not as if any one thing alone incensed the trial judge, but one thing really set off the appeals court.

"This case presents at least one clear, affirmative misrepresentation: one attorney asserted under oath that, after two years of litigation over the authenticity of the loan agreement, the plaintiff's attorneys had never challenged authenticity," the appeals court said.

Inauthentic

That miffed the court because the lawyers had previously said the defense copy of the agreement wasn't authenticated. They also said it didn't bear the borrower's signature. Six said he didn't have a copy of the agreement when he drafted the complaint -- as if they never had a copy.

It was key because Federal Rules of Civil Procedure, Rule 901, requires a proponent of evidence produce sufficient evidence that it is what the proponent purports it to be. The defense tried repeatedly to have a copy of the agreement admitted, but the plaintiff's lawyers used the rule against them.

Two years after filing the lawsuit, however, they admitted having a copy of the signed agreement all along. The trial judge sanctioned them for bad faith and imposed the penalty.

The Fourth Circuit affirmed. It also affirmed the findings that the attorneys demonstrated "cynical gamesmanship" and "deliberate obfuscation." Did we mention "egregious"?

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