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Caranchini v. Nationstar Mortgage LLC

United States District Court, W.D. Missouri, Western Division

April 8, 2019

GWENDOLYN GILL CARANCHINI, Plaintiff,
v.
NATIONSTAR MORTGAGE LLC, Defendant.

          ORDER DENYING GREGORY LEYH'S MOTION TO DISMISS MARTIN LEIGH'S MOTION FOR SANCTIONS

          Greg Kays, United States District Judge.

         This is Plaintiff Gwendolyn Caranchini's fourth lawsuit challenging the authority of her loan servicer and successor trustee-in this lawsuit, Nationstar Mortgage, LLC, (“Nationstar”) and Martin Leigh PC (“Martin Leigh”), respectively-to foreclose on her home. After the Court dismissed Martin Leigh because Plaintiff's claims against it were precluded by the facts and law established in her prior cases, Martin Leigh sought sanctions under Missouri's procedural rules against Plaintiff and her counsel, Gregory Leyh.

         Now before the Court is Leyh's Motion to Dismiss Martin Leigh's Motion for Sanctions (Doc. 48). Because the Court has the authority to impose sanctions on lawyers who appear before it, the motion is DENIED.

         Background

         Plaintiff has filed three prior lawsuits contesting the enforcement of the same promissory note and deed of trust. See Caranchini v. Bank of America, N.A., 4:10-CV-00672-DGK (removed to this Court on July 6, 2010; granting summary judgment to defendants on September 26, 2013; affirmed by the Eighth Circuit on September 12, 2014); Caranchini v. Kozeny & McCubbin, LLC, 4:11-CV-0464-DGK (removed to this Court on May 4, 2011; granting defendants summary judgment on September 26, 2013; affirmed by Eighth Circuit on September 12, 2014); and Caranchini v. Nationstar Mortgage, LLC and Kozeny & McCubbin, 4:14-CV-00480-DGK (removed on May 30, 2014; dismissed on September 23, 2014). Defendants prevailed in these cases because Plaintiff's claims were without merit. Nevertheless, in August 2017, Plaintiff and her counsel filed this lawsuit against Nationstar and Martin Leigh, asserting claims for negligent misrepresentation and violations of the Missouri Merchandising Practices Act (“MMPA”).

         Plaintiff originally filed the lawsuit in state circuit court. Nationstar timely removed the case to federal court (Doc. 1), alleging Plaintiff fraudulently joined Martin Leigh to avoid diversity jurisdiction. The Court agreed and dismissed Plaintiff's claims against Martin Leigh, finding the claims were foreclosed based on the facts and law established by her prior lawsuits (Doc. 24).

         In light of the Court's ruling, Martin Leigh served Leyh with a motion for sanctions on October 5, 2018. A month later, Martin Leigh filed a motion with the Court pursuant to Missouri Rule of Civil Procedure 55.03, seeking sanctions against Plaintiff and Leyh for fraudulently joining Martin Leigh “by asserting baseless claims” in the complaint. (Doc. 40 at 1). Leyh subsequently withdrew as Plaintiff's counsel so he could fully respond to the motion for sanctions without a conflict of interest (Doc. 42). Instead of responding to the motion for sanctions, Leyh filed the instant motion, alleging the Court is without the authority to sanction him.

         Argument

         This Order does not analyze or determine if sanctions against Leyh and his former client are warranted. Rather, it addresses only the narrow issue of whether the Court has the authority to impose sanctions in this case. The Court finds that it does.

         I. The Court has inherent authority to sanction attorneys who appear before it.

         Leyh does not argue the Court is without subject matter jurisdiction to hear the underlying merits of Plaintiff's case. Rather, he argues this Court is divested of jurisdiction solely over this motion because he and Martin Leigh are not diverse. That argument is unavailing.

         First, this Court has already determined that Martin Leigh was fraudulently joined to defeat diversity jurisdiction, and, therefore, its citizenship is irrelevant (Doc. 24). Leyh cites no authority that by filing the motion for sanctions, Martin Leigh's citizenship should now be considered. Likewise, Leyh provides no authority suggesting the motion for sanctions has somehow made him a party to this lawsuit. Nor could he. “[A]n attorney representing others is not a party to the lawsuit, and sanctioning an attorney personally for misconduct does not transform the attorney into a ‘party.'” See Trackwell v. B & J P'ship, No. 4:05-CV-3171, 2011 WL 41882, at *3 (D. Neb. Jan. 2, 2011).

         Second, even if the Court did not have subject matter jurisdiction, district courts retain the inherent authority to impose sanctions on attorneys appearing before them in the case regardless of whether there is jurisdiction over the underlying claim. Harlan v. Lewis, 982 F.2d 1255, 1259 (8th Cir. 1993); Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). In other words, a federal court must have subject matter jurisdiction to rule on the merits of a case, but the same is not required to impose sanctions on attorneys who have appeared before the court in the case. See Perkins v. General Motors Corp., 965 F.2d 597, 599 (8th Cir. 1992) (holding sanctions are collateral to the merits and may be considered by the district court even when it was divested of jurisdiction over the case itself).[1] Leyh does not dispute that he has appeared before the Court. Thus, the Court has the inherent authority to impose sanctions against him if warranted.

         II. The Court has the authority to impose sanctions pursuant ...


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