United States District Court, W.D. Washington, Seattle
ORDER GRANTING CAPITAL ONE AND MERS'S MOTION FOR
RULE 11 SANCTIONS AND ATTORNEYS' FEES UNDER CONTRACT AND
Robert S. Lasnik United States District Judge
matter comes before the Court on the motion for sanctions
filed by defendants Capital One and Mortgage Electronic
Registration Systems, Inc. (“Defendants”). Dkt. #
29. Having reviewed the memoranda, declarations, and exhibits
submitted by the parties, along with the remainder of the
record, the Court finds as follows.
facts of this case have already been summarized by the Court,
see Dkt. # 27, but in relevant part: This is the
third lawsuit involving the 2012 foreclosure of the
residential property located at 2222 West Lake Sammamish
Parkway NE, in Redmond, Washington (“the
Property”). Plaintiff is a self-settled trust
established by Gary and Diane Alexander (collectively,
“the Alexanders”) for the benefit of their adult
sons. Dkt. # 1, ¶ 2; Dkt. # 1, Ex. A-3. In October 2009,
the Alexanders defaulted on a three million dollar loan
secured by the Property. For the next thirty-two months, the
Alexanders continued to live on the Property without taking
any action to cure the default. On July 27, 2012, the
Alexanders received notice that the Property would be sold.
At the trustee's sale on November 30, 2012, Capital One
bought the Property for $2, 491, 148.85. In spite of the
foreclosure and trustee's sale, the Alexanders continued
living on the Property without making any rent payments or
payments on the loan, which was in default in excess of $561,
000 at the time of the trustee's sale.
order to delay their impending eviction, the Alexanders filed
two separate lawsuits in King County Superior Court against
Capital One, MERS, and a number of other defendants:
Alexander v. Capital One, et al.,
(“Alexander I”), No. 12-2-37609-3; and
Alexander v. Capital One, et al,
(“Alexander II”), No. 13-2-27723-9. The
Alexanders also engaged in a number of other delay tactics
while Alexander I was pending, such as filing for
bankruptcy the day before a summary judgment hearing in order
to trigger the automatic stay provision available to parties
engaged in bankruptcy proceedings.
summary judgment, the Alexander II court dismissed
all claims against Capital One and MERS. The court also
granted the defendants attorneys' fees and costs pursuant
to a provision of the Alexanders' deed of trust and
“for the baseless filing of the Complaint in violation
of [Washington Civil Rule 11].” No. 13-2-27723-9, slip
op. at 7. The court concluded that “[t]he entirety of
[P]laintiffs' lawsuit against defendants was frivolous
and advanced without reasonable cause because it could not be
supported by any rational argument on the law or
facts….” No. 13-2-27723-9, slip op. ¶¶
26-27. Attorneys' fees and costs were awarded in the
amount of $79, 526.63. Id. ¶ 28. The trial
court's decision was affirmed on appeal. Alexander v.
Capital One, Nos. 71952-1-I, 72350-2-I, 2015 WL 7736383
(Wash.Ct.App. Nov. 30, 2015).
Integrity Trust, an alter ego of the Alexanders, filed this
suit in federal court in June 2016. Dkt. # 1. In January
2017, this Court granted Defendants' motion to dismiss
and motion for summary judgment, Dkt. # 27, concluding that
Plaintiff was essentially seeking to relitigate Alexander
II and thus that all of Plaintiff's claims were
barred by the doctrine of claim preclusion.
now move for sanctions under Federal Rule of Civil Procedure
11, and for attorneys' fees under RCW 4.84.185 and the
terms of the Alexanders' deed of trust. Rule 11 requires
that an attorney sign a pleading, written motion, or other
paper only if, to the best of that attorney's knowledge,
information, and belief formed after a reasonable inquiry,
that filing is not being presented for any improper purpose,
and the claims within are warranted by existing law. When a
complaint is the primary focus of Rule 11 proceedings, the
Court asks (1) whether the complaint is legally or factually
baseless from an objective perspective, and (2) whether the
attorney conducted a reasonable and competent inquiry before
signing and filing it. Holgate v. Baldwin, 425 F.3d
671, 676 (9th Cir. 2005). An attorney who has violated Rule
11 may be sanctioned as necessary to deter repetition of the
sanctionable conduct. See Fed.R.Civ.P. 11(c). RCW
4.84.185 provides that a prevailing party may recover
attorneys' fees and other reasonable expenses incurred in
opposing a frivolous action. The Alexanders' deed of
trust also provides for an award of attorneys' fees. Dkt.
# 15-1 at 23.
argue that Plaintiff's counsel, J.J. Sandlin, violated
Fed.R.Civ.P. 11 by filing this lawsuit when he knew, based on
his involvement in Alexander II and communications
with Defendants' counsel, that the claims asserted in
Plaintiff's complaint were baseless and/or precluded.
Defendants further allege that Mr. Sandlin and Plaintiff
knowingly filed a baseless lawsuit in an effort to delay the
Alexanders' eviction. See Dkt. # 30, ¶ 4.
response to Defendants' motion for sanctions, Plaintiff
does not refute Defendants' claim that a competent
inquiry would have revealed this lawsuit to be legally
baseless. Rather, Plaintiff explains that it first filed this
frivolous lawsuit, then deliberately waited to serve
process while Mr. Sandlin investigated whether the suit had
any merit. In Plaintiff's own words: “the efforts
of [Plaintiff] and its attorney reflect the essence of good
faith. . . . In its conservative position, [Plaintiff]
purposefully declined to perfect original service of process,
relying upon Rule 4(m) to cause the potential lawsuit to
expire by operation of law. . . . As the plaintiff continued
to test its position it ultimately determined the action
should not be commenced, and deliberately failed to perfect
original service of process.” Dkt. # 34 at 11-12.
Because service never occurred, Plaintiff argues, this case
must be dismissed and the “motion for sanctions should
not proceed to judgment.” Dkt. # 34 at 7
and Mr. Sandlin have essentially conceded that they
intentionally wasted the Court's time by filing - and
then litigating rather than voluntarily dismissing - a
frivolous lawsuit. Such conduct is hardly “the essence
of good faith.” An award of attorneys' fees under
RCW 4.84.185 and sanctions under Fed.R.Civ.P. 11 are entirely
appropriate under the circumstances.
the foregoing reasons, Defendants' motion for sanctions
and attorneys' fees (Dkt. # 29) is GRANTED. Defendants
are ordered to submit a statement of reasonable
attorneys' fees incurred in defending this action within
fourteen days of the date of this order. Upon review of that
statement, the Court will enter an order awarding reasonable
attorneys' fees against Plaintiff and sanctioning Mr.
Sandlin for filing objectively baseless claims without
conducting a competent inquiry in violation of Rule 11.
 In compliance with Rule 11(c)(2)'s
safe harbor provision, Defendants first served this motion
for sanctions on Plaintiff in September ...