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Reed v. Big Water Resort, LLC

United States District Court, D. South Carolina, Charleston Division

October 4, 2017

William Reed, Donna Reed, Bonnie Youmans, Jane Yates, Phillip Caulder, all individually and for the benefit and on behalf of all others similarly situated, Plaintiffs,
v.
Big Water Resort, LLC, TLC Holdings, LLC, Richard Clark, James Thigpen, Jimmy “Steve” Lovell, and Ocoee, LLC, Defendants. TLC Holdings, LLC, Richard Clark, James Thigpen, Jimmy “Steve” Lovell, and Ocoee, LLC, Third-Party Plaintiffs,
v.
M. B. Hutson a/k/a M. B. Hudson, Third-Party Defendant.

          ORDER

          DAVID C. NORTON, UNITED STATES DISTRICT JUDGE

         This matter is before the court on the motion for sanctions filed by third-party plaintiffs TLC Holdings, LLC, Richard Clark, James Thigpen, Jimmy “Steve” Lovell, and Ocoee, LLC (“third-party plaintiffs”), ECF No. 302. For the reasons set forth below, the court grants the motion for sanctions.

         BACKGROUND

         Third-party plaintiffs previously moved for sanctions against third-party defendant Hutson, ECF No. 179, and also moved for summary judgment on Hutson's counterclaims, ECF No. 183. In the previous sanctions motion, third-party plaintiffs pointed to a course of conduct by Hutson which they argued was tantamount to harassment and abuse of the judicial system. The conduct cited by third-party plaintiffs included Hutson's repeated filing of motions lacking factual and legal support, his accusations of criminal conduct and threats to contact law enforcement, and his accusations of unethical conduct by third-party plaintiffs' counsel. See ECF No. 179-1.

         Magistrate Judge Mary Gordon Baker issued a report and recommendation acknowledging several improper actions by Hutson, including his continued filing of trial-related motions despite being told that such motions were premature and his refiling of a motion previously denied by Magistrate Judge Bristow Marchant. Magistrate Judge Baker recommended that third-party plaintiffs' previous motion be denied in light of the facts that Hutson was pro se, that he had not been previously warned that his conduct may merit sanctions, that he withdrew some of his offending filings, and that he would no longer be proceeding pro se if this court were to adopt her recommendations to dismiss his pro se counterclaims. ECF No. 270 at 13-14. In an order dated May 20, 2016, this court adopted Magistrate Judge Baker's report and recommendation, declining to impose sanctions on Hutson and granting summary judgment in favor of the third-party plaintiffs on Hutson's counterclaims. ECF No. 280 at 8, n.1.

         On April 21, 2017, Hutson filed a motion to reconsider this court's order dismissing his counterclaims. ECF No. 298. Third-party plaintiffs filed a response to the motion, asserting that it failed to identify any new evidence, despite Hutson's claims to the contrary; failed to demonstrate any of the requirements for amending a judgment under FRCP 59(e), and was untimely under that rule; failed to satisfy the requirements of FRCP 60; and improperly asked the court to review a state court judgment in a separate proceeding. See ECF No. 300. This court denied Hutson's motion. ECF No. 306.

         After Hutson filed his motion to reconsider, third-party plaintiffs then filed the instant motion for sanctions. They argue that Hutson's bad faith intent is evidenced by his motion to reconsider, which lacks legal support, falsely purports to offer new evidence, and repeats the same allegations he has made in numerous filings throughout the course of this litigation. Third-party plaintiffs further assert that no inference can be drawn from Hutson's conduct except that he desires to harass them and increase their legal expense. They incorporate by reference their prior motion for sanctions and supporting memorandum, which sets forth the history of Hutson's conduct. Third-party plaintiffs request both monetary and non-monetary sanctions, the latter in the form of an order barring Hutson from submitting further pro se filings to the court.

         STANDARD

         The court has the inherent power to impose sanctions on litigants when merited by their conduct:

Rule 11 has not robbed the district courts of their inherent power to impose sanctions for abuse of the judicial system. In Chambers v. NASCO, Inc., 501 U.S. 32, 49111 S.Ct. 2123, 115 L.Ed.2d 27 (1991), the Court was quite clear that “the inherent power of a court can be invoked even if procedural rules exist which sanction the same conduct.” The Court stated that there was “no basis for holding that the sanctioning scheme of the statute and the rules displaces the inherent power to impose sanction for . . . bad-faith conduct . . . .”

Drake v. Ham, 2007 U.S. Dist. LEXIS 58060, at *4 (D.S.C. 2007) (quoting Methode Elecs. v. Adam Techs., 371 F.3d 923, 927 (7th Cir. 2004)). “Due to the very nature of the court as an institution, it must and does have an inherent power to impose order, respect, decorum, silence, and compliance with lawful mandates. This power is organic, without need of a statute or rule for its definition, and it is necessary to the exercise of all other powers.” United States v. Shaffer Equip. Co., 11 F.3d 450, 461 (4th Cir. 1993). “Sanctions authorized under the court's inherent powers include the striking of frivolous pleadings or defenses, disciplining lawyers, punishing for contempt, assessment of attorney's fees, and outright dismissal of a lawsuit.” Drake, 2007 U.S. Dist. LEXIS 58060 at *4-5. Sanctions imposed under the court's inherent power serve the purpose of penalizing and deterring violations of the judicial process. In re Howe, 800 F.2d 1251, 1252 (4th Cir. 1986). The court's inherent power to sanction includes penalties up to and including outright dismissal of the offending party's claims. Chambers v. Nasco, 501 U.S. 32, 44-45 (1991). “[A]n assessment of attorney's fees is undoubtedly within a court's inherent power.” Id. at 45. “A court may assess attorney's fees when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Id. at 45-46. Unlike the statutory and rule-based sanctioning schemes, which reach only certain conduct, “the inherent power extends to a full range of litigation abuses.” Id. at 46.

         Further, pro se parties are not exempt from the Rules of Civil Procedure or from the requirements of respect and decorum before the court. District courts must “not allow liberal pleading rules and pro se practice to be a vehicle for abusive conduct.” Spears v. Warden FCI Williamsburg, 2016 WL 2935894 (D.S.C. Apr. 20, 2016), at *1.

         DISCUSSION

         Hutson's status as a pro se party in this matter ended when this court granted summary judgment on his counterclaims in favor of third-party plaintiffs. Since that time, his capacity as a party to this case has been limited to his status as a third-party defendant defending the equity ...


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