Appeal by Max D. Ballinger, attorney for several defendants,
from order entered 3 March 2005 by Judge John O. Craig III in
Randolph County Superior Court. Heard in the Court of Appeals 22
March 2006.
Max D. Ballinger, pro se, appellant.
No brief filed on behalf of plaintiff.
No brief filed on behalf of defendants.
GEER, Judge.
Attorney Max D. Ballinger appeals from an order imposing a
$5,000.00 sanction under both Rule 11 of the Rules of Civil
Procedure and the trial court's inherent supervisory powers. We
hold that the trial court did not err in imposing sanctions, but
that the order does not contain adequate findings of fact to
explain the basis for the court's selection of the sanction
ultimately imposed. We, therefore, remand for entry of further
findings of fact.
Facts
Mr. Ballinger has represented several of testatrix Myrtle
Greeson Canoy's children in lengthy legal proceedings regarding Ms.
Canoy's estate. Under Ms. Canoy's will, one of the Canoy children,
Roger, was granted a life estate in the decedent's real property. Roger refused to pay the taxes on the property, however, which
ultimately resulted in litigation with his siblings.
In October 1998, pursuant to a court order, a portion of the
decedent's real property not subject to the life estate was sold in
order to pay outstanding taxes and close the estate. After paying
various expenses, the estate's Administrator, Scott Nash Dunn, was
unable to determine which defendants were entitled to the money
remaining in the estate and, therefore, filed an interpleader
complaint in which he sought to have the trial court order the
various defendants to "interplead their respective claims and
settle their claims between themselves," permit Mr. Dunn to pay the
estate's balance to the Clerk of Superior Court in Randolph County,
and "discharge [Mr. Dunn] from all liability in this matter." In
July 2003, Mr. Ballinger, representing several of the defendants,
filed an answer with counterclaims and cross-claims.
The matter was heard by Judge John O. Craig III on 10 June
2004. At the hearing, Judge Craig encouraged a settlement in which
Roger would release his life estate in exchange for fee-simple
title to an 18-acre parcel of the decedent's land. The remaining
Canoy children would become fee-simple owners of the decedent's
remaining 42 acres. Following Judge Craig's recommendation, the
parties discussed various details, including the likelihood of
future litigation, taxation, whether the consent of spouses was
necessary, and outstanding fees for the administrator and the
various attorneys.
After this discussion, the following exchange occurred: MR. BALLINGER: . . . . I really
appreciate [the court's] attempts to settle
this matter and [sic] most gracious and we
accept it.
THE COURT: Do you accept the settlement
on behalf of your clients?
MR. BALLINGER: Yes, I do.
Judge Craig then summarized the agreement:
If Mr. Roger Canoy relinquishes his life
estate in all of the property except the
eighteen _ approximately, eighteen acres that
are north of the creek, then the remaining
heirs will become holders of that property
south of the creek as fee simple, free and
clear owners of the property.
He added that the settlement "would almost have the same effect" as
if Roger died, explaining that his "life estate would end and all
the other heirs would then become outright owners of it because the
remainder interest would come into being . . . ."
Although one Canoy child not represented by Mr. Ballinger
objected to the settlement, Mr. Ballinger gave no indication that
he did not approve of the settlement and explained his
understanding that:
We [(Mr. Ballinger's clients)] would renounce
the rights to the eighteen acres and convey
the right, title and interest to the eighteen
acres to Roger Canoy on that side of the
creek. And Roger would renounce all rights to
all the property and all the monies in the
Clerk of Court or in the hands of the
Administrator or anyone else. That he would
renounce _ he would just sign a deed.
In response to Mr. Ballinger's concerns regarding potential future
claims between the parties, Judge Craig added that he understood
the agreement "would be in language in which there were full andcomplete releases signed going every which way so that no one would
have a claim against the other . . . ."
All parties then agreed to the settlement on the record and
under oath. Judge Craig designated Mr. Dunn as the primary
draftsman. Judge Craig then notified the parties that he would be
out of the country beginning on 17 June 2004.
On 11 June 2004, Mr. Dunn mailed a draft order to the court
and provided a copy to counsel on the same date. On 14 June 2004,
the court returned the order to Mr. Dunn with certain revisions.
On 15 June 2004, Mr. Ballinger sent Judge Craig, with copies to
counsel, a draft order that he had prepared. He stated in his
letter: "Enclosed is a copy of a Consent Judgment I am prepared to
have my clients sign." In a subsequent affidavit, Mr. Ballinger
explained that he felt it was "easier to simply draft a proposed
consent judgment rather than take on the task of trying to address
Mr. Dunn's draft at that time." The following day, Mr. Ballinger
sent a second letter to Judge Craig stating: "Enclosed is a copy of
a Consent Judgment I am having my clients sign. Having not heard
from you, I presume that as to you the enclosed is satisfactory."
Mr. Ballinger explained that he believed his proposed settlement
agreement would quiet title as to all who signed it and prevent
further litigation.
On 25 June 2004, Mr. Dunn wrote Mr. Ballinger, advised him
that his proposed consent judgment was not acceptable, and enclosed
a revised version of Mr. Dunn's proposed judgment. On 1 July 2004,
Mr. Dunn sent an additional revision, asking whether it wasacceptable. On 28 July 2004, Mr. Dunn forwarded a final version of
the consent judgment and asked that it be signed and returned by 20
August 2004. He added: "The failure of any party to comply with
this request may result in a contempt motion being filed against
them."
On 15 August 2004, Mr. Ballinger sent a seven-page letter to
Mr. Dunn with a copy to Judge Craig raising numerous concerns about
the consent judgment, stating that his clients declined to sign it,
and withdrawing the "proposed settlement" embodied in Mr.
Ballinger's proposed judgment. On the same date, Mr. Ballinger
sent a 13-page letter directly to Judge Craig, requesting that the
judge reconsider signing Mr. Dunn's proposed order. The letter
stated that both Mr. Ballinger and his clients objected to Judge
Craig "sign[ing] any order without further negotiation" and that
they would not "sign a consent order that is contrary to that which
[Mr. Ballinger's] clients would find to be acceptable."
On 1 September 2004, the court forwarded a calendar setting
the matter for hearing on 16 September 2004. On 6 September 2004,
Mr. Ballinger sent a 10-page letter to Judge Craig and Judge
Russell G. Walker, Jr., arguing the merits of his clients' claims,
requesting rulings on the merits, and expressing the opinion that
the matter could not be settled without the presence of additional
parties.
Following these series of letters, Mr. Dunn filed a motion
requesting that Mr. Ballinger and several Canoy children be held in
civil contempt for willful non-compliance with prior court orders. Judge Craig conducted a hearing on 16 September 2004 at which he
informed Mr. Ballinger that he believed Mr. Ballinger's conduct had
violated a North Carolina State Bar Ethics Opinion and several of
the Revised Rules of Professional Conduct. Judge Craig also
expressed his belief that Mr. Ballinger's description of the
settlement differed from what was actually agreed to at the 10 June
2004 hearing.
At the hearing, Mr. Ballinger announced that "as far as
consenting to the judgment, I have not at any time refused to
consent to the judgment and will sign the thing today, if that's
your order that [my clients] can't withdraw their exceptions. We
respectfully submit to exactly what was in the court transcript
last time. And my clients would consent to that, also." Later,
Mr. Ballinger signed the back of the transcript of the 10 June 2004
hearing and handed it to his clients stating: "I asked them to sign
it. But . . . I'm not refusing to sign it. I didn't recommend
that they sign [the agreement reached 10 June], but they agreed to
it. Therefore, I will sign it." Judge Craig suggested that if any
of Mr. Ballinger's clients declined to sign the transcript, he
might have a conflict of interest. Mr. Ballinger then withdrew his
signature.
At the end of the hearing, Judge Craig told Mr. Ballinger: "I
am not looking so much as a contempt of court citation toward you,
but I am seriously going to inquire as to whether it's appropriate
to impose sanctions under Rule 11." Judge Craig then scheduled an
additional hearing for 30 September 2004. At the 30 September hearing, Judge Craig accepted an affidavit
from Mr. Ballinger explaining his actions. Judge Craig then
questioned Mr. Ballinger and the other lawyers regarding what had
occurred at the original hearing. Further, after reviewing a brief
submitted by one of the other attorneys, Judge Craig concluded that
he could not enter the consent judgment without consent of all the
parties.
On 4 March 2005, Judge Craig entered an order concluding that
Mr. Ballinger's letters dated 15 and 16 June 2004, 15 August 2004,
and 6 September 2004 came within the scope of Rule 11, were
interposed for an improper purpose, and justified sanctions under
Rule 11. In addition, Judge Craig concluded that "Mr. Ballinger's
actions during the hearing on September 16, whereby he stated that
his previous letters were entirely the fault of his clients, and
his theatrical gesture of signing the consent order, were at best
disingenuous concealments or facile misrepresentations to the Court
since he attempted to distance himself from the contents of his own
letters." He concluded that this conduct "appears to have violated
Rule 1.7(a)(1) and Rule 1.8(g) of the Revised Rules of Professional
Conduct" and "[i]n any event, his actions constituted a deception
practiced against this Court and wasted the Court's time as well as
the time of the attorneys involved, all at the ultimate expense of
his clients and the other parties to these actions." Judge Craig's
order stated that he chose to sanction this "improper, vexatious
conduct" under the inherent powers of the court. Judge Craig's order stated that he had considered the range of
sanctions available to him, including reprimand or censure, but had
concluded, in his discretion, "that a monetary sanction of $5,000
is appropriate under Rule 11 and the Court's inherent authority
over proceedings to punish Mr. Ballinger for his misconduct, with
the money to be paid to the Estate of Myrtle Greeson Canoy for its
use in defraying the expenses and attorney fees (excluding Mr.
Ballinger's fees and expenses) that have arisen as a result of the
various hearings which were held after preparation for and
attendance at the June 10, 2004 hearing." Judge Craig also ordered
(1) that Mr. Ballinger not charge his clients for any work or
expenses in connection with preparation for, or attendance at, the
30 September 2004 hearing and (2) that the matters in the order be
referred to the North Carolina State Bar.
Mr. Ballinger timely appealed to this Court. We note that the
record on appeal indicated that Judge Craig was the appellee. This
Court entered an order
ex mero motu stating that, although Judge
Craig's order was being appealed, "Judge Craig is not now nor [w]as
he ever . . . a party to this action and [he was] improperly named
as a party in the record on appeal." This Court thereafter
dismissed Judge Craig as a party.
I
[1] Mr. Ballinger first challenges the propriety of Judge
Craig's ruling on sanctions and the process by which sanctions were
imposed. We hold that he has failed to demonstrate any error. Mr. Ballinger argues that Judge Craig should have granted his
motion that the judge recuse himself from hearing any sanctions
motion. "[A] party has a right to be tried before a judge whose
impartiality cannot reasonably be questioned."
State v. Fie, 320
N.C. 626, 627, 359 S.E.2d 774, 775 (1987). Therefore, "[o]n a
motion of any party, a judge should [be] disqualif[ied] . . . in a
proceeding in which his impartiality may reasonably be questioned,
including but not limited to instances where . . . [h]e has a
personal bias or prejudice concerning a party . . . ." N.C. Code
of Judicial Conduct, Canon 3(C)(1)(a).
The party moving for disqualification bears the burden of
demonstrating objectively that grounds for disqualification
actually exist.
Lange v. Lange, 357 N.C. 645, 649, 588 S.E.2d 877,
880 (2003). This Court has explained that "[t]he moving party,
supported by affidavits, may meet his burden by presenting
'substantial evidence that there exists such a personal bias,
prejudice or interest on the part of the judge that he would be
unable to rule impartially.'"
County of Johnston v. City of
Wilson, 136 N.C. App. 775, 778, 525 S.E.2d 826, 828 (2000)
(quoting
In re Nakell, 104 N.C. App. 638, 647, 411 S.E.2d 159, 164 (1991),
appeal dismissed and disc. review denied, 330 N.C. 851, 413 S.E.2d
556 (1992)).
Mr. Ballinger submitted no affidavits providing any evidence
of personal bias, prejudice, or interest. Instead, Mr. Ballinger's
sole argument both to Judge Craig and on appeal is that Judge
Craig's annoyance with Mr. Ballinger's disruption of the settlementwarranted recusal. This Court has specifically held that a judge's
reaction to attempts to disrupt a potential settlement does not,
without more, require recusal:
We note that a trial judge's decision to
"explor[e] settlement possibilities [is] a
function to be commended to all trial judges
in civil cases" and is not generally a ground
for disqualifying a judge.
Roper v. Thomas,
60 N.C. App. 64, 76, 298 S.E.2d 424, 431
(1982),
disc. review denied, 308 N.C. 191, 302
S.E.2d 244 (1983). Moreover, even where a
trial judge becomes ostensibly angry at the
failure of settlement negotiations, his
disqualification is not necessarily required
under the law.
State v. Kamtsiklis, 94 N.C.
App. 250, 258-59, 380 S.E.2d 400, 404,
appeal
dismissed, disc. review denied, 325 N.C. 711,
388 S.E.2d 466 (1989).
Melton v. Tindall Corp. (In re Pedestrian Walkway Failure), 173
N.C. App. 237, 253, 618 S.E.2d 819, 829-30 (2005),
disc. review
denied, 380 N.C. 290, 628 S.E.2d 382 (2006). Beyond Judge Craig's
reaction regarding Mr. Ballinger's actions in connection with the
settlement agreement, the record reveals nothing that could be
construed as demonstrating any personal bias, prejudice, or
interest by Judge Craig.
Indeed, to require recusal in this instance would be to
require recusal whenever an attorney engages in sanctionable
conduct offending or irritating a judge. Not surprisingly, Mr.
Ballinger has cited no authority requiring that a new judge
determine whether conduct before another judge warrants sanctions.
See Nakell, 104 N.C. App. at 648, 411 S.E.2d at 165 ("Our
examination of the record reveals no bias, prejudice, or proof that
would require the judge
before whom the contempt was committed torecuse himself from conducting a hearing [on the contempt]."
(emphasis added)). In the absence of some other indication that
Judge Craig harbored personal bias or prejudice against Mr.
Ballinger, or was somehow improperly interested in the outcome of
this case, we conclude that Mr. Ballinger has failed to demonstrate
that the motion for recusal should have been allowed.
[2] Mr. Ballinger alternatively contends that Judge Craig
lacked authority to address sanctions because Judge Craig had
improperly assumed the role of a mediator in the proceedings. It
is true that Canon 5(E) of the North Carolina Code of Judicial
Conduct provides that "[a] judge should not act as an arbitrator or
mediator." Additionally, Mr. Ballinger is correct that, at the 10
June 2004 hearing, Judge Craig expressed his personal opinions on
the case and stated that "in so giving and expressing my opinion
and telling you what I think is a good idea, it probably removes me
from that air of neutrality or impartiality and would, therefore,
make it difficult for me to ethically hear any of the motions."
While, as Judge Craig acknowledged, these remarks could
interfere with his ability to preside over continued proceedings
regarding the merits of the action, Mr. Ballinger has cited no
authority for his conclusion that "Judge Craig lost his authority
to judicially discipline [Mr. Ballinger] . . . ."
See N.C.R. App.
P. 28(b)(6) ("Assignments of error . . . in support of which no
reason or argument is stated
or authority cited, will be taken as
abandoned." (emphasis added)). Nor have we found any authority
supporting Mr. Ballinger's position. Accordingly, Mr. Ballingerhas failed to demonstrate that Judge Craig's conduct at the 10 June
hearing stripped him of authority to impose sanctions.
[3] Mr. Ballinger also argues that he was denied procedural
due process under the federal and state constitutions because he
was not given adequate notice of the charges, sufficient
opportunity to respond, permission to call witnesses, or a list
identifying the evidence upon which the court was basing its
sanction order. The record indicates otherwise.
"'Notice and an opportunity to be heard prior to depriving a
person of his property are essential elements of due process of law
which is guaranteed by the Fourteenth Amendment of the United
States Constitution.'"
Griffin v. Griffin, 348 N.C. 278, 280, 500
S.E.2d 437, 438 (1998) (quoting
McDonald's Corp. v. Dwyer, 338 N.C.
445, 448, 450 S.E.2d 888, 891 (1994)). To receive adequate notice,
"[t]he bases for the sanctions must be alleged. . . . In order to
pass constitutional muster, the person against whom sanctions are
to be imposed must be advised in advance of the charges against
him."
Id., 500 S.E.2d at 439.
Here, the court held two hearings regarding Mr. Ballinger's
conduct. At the 16 September hearing, Judge Craig specifically
told Mr. Ballinger in what ways he believed Mr. Ballinger's conduct
had run afoul of 98 Formal Ethics Op. 13 (1999) and Revised Rules
of Professional Conduct 1.7(a)(1), 1.8(g), and 8.4(d). Judge Craig
also specifically informed Mr. Ballinger that he was considering
imposing Rule 11 sanctions. At the 30 September hearing, the court
accepted an affidavit from Mr. Ballinger and questioned both Mr.Ballinger as well as the other lawyers in the case. Mr. Ballinger
was thus given notice of the "charges" against him in advance and
was given an opportunity to be heard. We hold that Mr. Ballinger's
due process rights were fully protected.
II
Mr. Ballinger next argues that the trial court erred by
imposing sanctions under Rule 11. Rule 11 provides:
Every pleading, motion, and other paper of a
party represented by an attorney shall be
signed by at least one attorney of record in
his individual name, whose address shall be
stated. . . . The signature of an attorney or
party constitutes a certificate by him that he
has read the pleading, motion, or other paper;
that to the best of his knowledge,
information, and belief formed after
reasonable inquiry it is well grounded in fact
and is warranted by existing law or a good
faith argument for the extension,
modification, or reversal of existing law, and
that it is not interposed for any improper
purpose . . . .
N.C.R. Civ. P. 11(a).
Our Supreme Court has held that "[t]he trial court's decision
to impose or not to impose mandatory sanctions under N.C.G.S. §
1A-1, Rule 11(a) is reviewable
de novo as a legal issue."
Turner
v. Duke Univ., 325 N.C. 152, 165, 381 S.E.2d 706, 714 (1989). In
describing the nature of this "
de novo review," the Court has
explained:
[T]he appellate court will determine (1)
whether the trial court's conclusions of law
support its judgment or determination, (2)
whether the trial court's conclusions of law
are supported by its findings of fact, and (3)
whether the findings of fact are supported by
a sufficiency of the evidence.
If the
appellate court makes these threedeterminations in the affirmative, it must
uphold the trial court's decision to impose or
deny the imposition of mandatory sanctions
under N.C.G.S. § 1A-1, Rule 11(a).
Id. (emphasis added).
A.
The Findings of Fact
[4] With respect to Judge Craig's findings of fact, we must
first determine whether Mr. Ballinger has properly assigned error
to them. Mr. Ballinger has failed to comply with the current
version of the Appellate Rules: he lists 19 assignments of error
and follows each with a list of "exceptions," which, in turn, refer
to individual "exceptions" written into a copy of Judge Craig's
order. As this Court reminded attorneys in
White v. Weyerhaeuser
Co., 167 N.C. App. 658, 606 S.E.2d 389 (2005), this manner of
assigning error was eliminated in 1988:
[A]pparently operating based on an outdated
version of our Appellate Rules, Weyerhaeuser
has assigned error only to certain conclusions
of law, but under each of the assignments of
error has listed "Defendant's Exception[s],"
referring to "exception[s]" typed onto a copy
of the Commission's Opinion and Award. . . .
. . . .
In 1988, Rule 10 was amended "to put an
end to the formality of marking exceptions in
the transcript of the proceedings as formerly
required by Rule 10(b)(2). Accordingly, the
language of the former Rule 10(b)(2),
requiring that the record on appeal reflect a
separate exception for each finding of fact
assigned as error, was deleted from the
current version of Rule 10(b)(2)."
State v.
Canady, 330 N.C. 398, 404-05, 410 S.E.2d 875,
879 (1991) (Meyer, J., dissenting). . . .
. . . .
Under [the current Rule 10], an appellant
is required to specifically assign error to
each finding of fact that it contends is not
supported by competent evidence. "[F]indings
of fact to which [an appellant] has not
assigned error and argued in his brief are
conclusively established on appeal."
Static
Control Components, Inc. v. Vogler, 152 N.C.
App. 599, 603, 568 S.E.2d 305, 308 (2002).
Thus, "[a] single assignment [of error]
generally challenging the sufficiency of the
evidence to support numerous findings of fact
. . . is broadside and ineffective" under
N.C.R. App. P. 10.
Wade v. Wade, 72 N.C. App.
372, 375-76, 325 S.E.2d 260, 266,
disc. review
denied, 313 N.C. 612, 330 S.E.2d 616 (1985).
Since Weyerhaeuser has failed to challenge the
sufficiency of the evidence to support the . .
. specific findings of fact, they are binding
on appeal under the current rules.
Id. at 659-61, 606 S.E.2d at 392-93 (alterations in original).
In this case, Mr. Ballinger includes a number of broadside
assignments of error generally challenging the findings of fact.
None of the assignments of error specifically refers to any finding
of fact. Although Mr. Ballinger may have referenced specific
assignments of error by use of his exceptions, that approach is
inconsistent with the current appellate rules, and, given the fact
that these rules have been in effect for 18 years, we choose not to
exercise our discretion to waive compliance with those rules.
See
Viar v. N.C. Dep't of Transp., 359 N.C. 400, 402, 610 S.E.2d 360,
361 (2005) ("It is not the role of the appellate courts . . . to
create an appeal for an appellant.").
The only findings of fact that are specifically described in
the assignments of error _ although not by number _ are Judge
Craig's findings (1) that Mr. Ballinger's writings were filed for
an improper purpose, (2) that his conduct was improper andvexatious, (3) that he represented a client whose interest was or
was likely to be adverse to another client, and (4) that he
participated in an aggregate settlement without obtaining proper
consent from his clients. These findings will be addressed below
in connection with each of Mr. Ballinger's overall arguments.
Because Mr. Ballinger has not properly assigned error to any of the
other findings of fact, they are binding on appeal.
B.
Applicability of Rule 11
[5] Mr. Ballinger contends that his June, August, and
September letters do not fall within the scope of Rule 11. Judge
Craig, however, concluded that Rule 11's reference not only to
motions and pleadings, but also "other paper[s] of a party
represented by an attorney" made Rule 11 applicable. N.C.R. Civ.
P. 11(a). The question whether letters to judges may constitute
"other papers" under Rule 11 has not yet been addressed by North
Carolina's appellate courts.
Compare Williams v. Hinton, 127 N.C.
App. 421, 424, 490 S.E.2d 239, 241 (1997) (Rule 11 held not to
apply because failure to notify of scheduling conflict not a
"pleading, motion, or other paper");
Ward v. Lyall, 125 N.C. App.
732, 735, 482 S.E.2d 740, 742,
disc. review denied, 346 N.C. 290,
487 S.E.2d 573 (1997) (Rule 11 held not to apply because failure to
promptly serve the summons and complaint not a pleading, motion, or
other paper). Decisions under the federal Rule 11 are, however,
considered instructive in interpreting our rule.
Turner, 325 N.C.
at 164, 381 S.E.2d at 713. As the First Circuit has noted: "Courts have been properly
reluctant to characterize a letter generally as an 'other paper' in
weighing Rule 11 sanctions."
Legault v. Zambarano, 105 F.3d 24, 27
(1st Cir. 1997).
See also Curley v. Brignoli Curley & Roberts,
Assocs., 128 F.R.D. 613, 616 (S.D.N.Y. 1989) ("The contention . .
. that Rule 11 should apply to any paper sent to the court, such as
a letter, is not supportable."). When, however, a letter is sent
to a judge with the intent that it influence the judge to take some
action, federal courts have considered the letter to be in effect
a motion subject to Rule 11.
See Klein v. Wilson, Elser,
Moskowitz, Edelman & Dicker (In re Highgate Equities, Ltd.), 279
F.3d 148, 154 (2d Cir. 2002) ("Courts have generally [applied Rule
11 to letters] only where the letter in question was in effect a
motion in disguise, recognizing that failure to sanction in such
cases would elevate form over substance.");
Legault, 105 F.3d at 27
(holding that Rule 11 applied to a letter sent with the intent to
influence the court with respect to injunctive relief);
Lopez v.
Constantine, 94 Civ. 5921, 95 Civ. 5915, 1997 U.S. Dist. LEXIS
8625, at *9 n.6, 1997 WL 337510, at *3 n.6 (S.D.N.Y. June 18, 1997)
("Those cases in which a letter has served as the basis for Rule 11
sanctions have involved instances in which a party has sought to
have a court take action in reliance on it.").
We agree with these courts that the reference to "other
papers" should, at least, encompass letters forwarded to a court
that seek to influence the court to take particular action. To
hold otherwise would encourage parties to avoid compliance withRule 11 by submitting letters rather than formal motions and
pleadings _ truly an undesirable result. Mr. Ballinger's letters
were sent with the intent of persuading Judge Craig not to enter
Mr. Dunn's proposed order and to revisit the merits of his clients'
claims. The letters, therefore, fall within the scope of Rule 11.
[6] Mr. Ballinger next challenges the trial court's finding
that his letters were "interposed for an improper purpose."
"[W]hether a pleading, motion or other paper was filed for an
improper purpose must be reviewed under an objective standard."
Bryson v. Sullivan, 330 N.C. 644, 663, 412 S.E.2d 327, 337 (1992).
An improper purpose includes "caus[ing] unnecessary delay or
needless increase in the cost of litigation." N.C.R. Civ. P.
11(a).
See also Brown v. Hurley, 124 N.C. App. 377, 382, 477
S.E.2d 234, 238 (1996) ("An improper purpose is 'any purpose other
than one to vindicate rights . . . or to put claims of right to a
proper test.'" (quoting
Mack v. Moore, 107 N.C. App. 87, 93, 418
S.E.2d 685, 689 (1992)).
Although we have concluded that Mr. Ballinger assigned error
to the finding of an improper purpose, he did not properly assign
error to the trial court's other findings that he used his letters
to revisit settled issues, to cause unnecessary delay, and to
commandeer the drafting process contrary to the court's
instructions. These findings are binding on appeal and support the
trial court's ultimate finding that the letters were interposed for
an improper purpose.
See, e.g.,
Turner, 325 N.C. at 167, 381
S.E.2d at 715 (disrupting opposing counsel's trial preparationconstituted an improper purpose);
Davis v. Durham Mental
Health/Dev. Disabilities/Substance Abuse Area Auth., 165 N.C. App.
100, 109-10, 598 S.E.2d 237, 243-44 (2004) (improper purpose found
when plaintiff sued in retaliation and in order to gain leverage in
negotiations).
(See footnote 1)
[7] Once the trial court found that Mr. Ballinger's letters
met the improper purpose prong of Rule 11, it was entitled to
impose sanctions.
See Dodd v. Steele, 114 N.C. App. 632, 635, 442
S.E.2d 363, 365 ("There are three parts to a Rule 11 analysis: (1)
factual sufficiency, (2) legal sufficiency, and (3) improper
purpose. A violation of any one of these requirements mandates the
imposition of sanctions under Rule 11." (internal citation
omitted)),
disc. review denied, 337 N.C. 691, 448 S.E.2d 521
(1994). We, therefore, uphold Judge Craig's decision to impose
sanctions under Rule 11.
III
[8] Mr. Ballinger also challenges Judge Craig's decision to
impose sanctions under the inherent powers of the court. "North
Carolina case law is . . . clear that the exercise of a court's
inherent authority is reviewed for abuse of discretion."
Couch v.
Private Diagnostic Clinic, 146 N.C. App. 658, 663, 554 S.E.2d 356,361 (2001),
appeal dismissed and disc. review denied, 355 N.C. 348,
563 S.E.2d 562 (2002). A trial court's inherent authority
encompasses not only the "power but also the duty to discipline
attorneys, who are officers of the court, for unprofessional
conduct."
In re Hunoval, 294 N.C. 740, 744, 247 S.E.2d 230, 233
(1977). Unprofessional conduct subject to this power and duty
"includes misconduct, malpractice, or deficiency in character, . .
. and any dereliction of duty except mere negligence or
mismanagement."
Id. (internal quotation marks omitted).
Here, in identifying unprofessional conduct, the trial court
concluded that Mr. Ballinger violated 98 Formal Ethics Op. 13 when
sending his letters to the court. 98 Formal Ethics Op. 13
addresses whether "a lawyer [may] communicate in writing with a
judge or other judicial official about a proceeding that is pending
before the judge or judicial official[.]" The opinion acknowledges
that a broad reading of the applicable ethics rules would permit
"unlimited written communications" so long as a copy is
simultaneously provided to the other parties and the communication
is not "prejudicial to the administration of justice."
Id.
Nevertheless, the opinion concludes:
To avoid the appearance of improper influence
upon a tribunal, informal written
communications with a judge or other judicial
official should be limited to the following:
1) Written communications, such as a proposed
order or legal memorandum, prepared pursuant
to the court's instructions;
2) Written communications relative to
emergencies, changed circumstances, or
scheduling matters that may affect theprocedural status of a case such as a request
for a continuance due to the health of a
litigant or an attorney;
3) Written communications sent to the tribunal
with the consent of the opposing lawyer or
opposing party if unrepresented; and
4) Any other communication permitted by law or
the rules or written procedures of the
particular tribunal.
Id.
In the present case, the trial court concluded that Mr.
Ballinger's 15 and 16 June 2004 letters were sent contrary to the
court's instructions that directed Mr. Dunn to draft the proposed
order. We note, however, that Mr. Ballinger's letters were
responding to Mr. Dunn's proposed order and explaining why,
according to Mr. Ballinger, that order was in error and proposing
an alternative order. We cannot agree with the trial court that a
lawyer necessarily commits professional misconduct if he simply
sends a letter in response to a proposed order that was submitted
directly to the trial judge without prior opportunity for the
lawyer to comment on the draft order.
A contrary construction of the Rules of Professional Conduct
would be inconsistent with 97 Formal Ethics Op. 5 (1998), which
provides:
[F]ailure to give the opposing lawyer an
opportunity to comment upon or object to a
proposed order before it is submitted to the
judge is unprofessional and may be prejudicial
to the administration of justice. It is the
more professional practice for a lawyer to
provide the opposing counsel with a copy of a
proposed order in advance of delivering the
proposed order to the judge and thereby give
the opposing counsel an adequate opportunityto comment upon or object to the proposed
order.
At a minimum, Rule 3.5(a)(3)(ii) requires
a lawyer to furnish the opposing lawyer with a
copy of the proposed order simultaneously with
its delivery to the judge and, if the proposed
order is furnished to the opposing counsel
simultaneously, Rule 3.3(d) requires the
lawyer to disclose to the judge in the ex
parte communication that the opposing lawyer
has received a copy of the proposed order but
has not had an opportunity to present any
comments or objections to the judge.
(Emphases added.) This opinion thus anticipates that a party will
have an opportunity to present comments and objections regarding
the draft order to the judge. To sanction an attorney for
presenting such comments or objections in a letter rather than some
formal document would seem to elevate form over substance,
especially in light of our holding in this case that such letters
are subject to Rule 11.
In short, to the extent that Mr. Ballinger's letters were
responding to Mr. Dunn's proposed order, we hold that they did not
violate 98 Formal Ethics Op. 13. Nevertheless, Judge Craig was
free to conclude, as he did, that they were unprofessional for
other reasons, such as violating Rule 11.
[9] We reach a different conclusion with respect to Mr.
Ballinger's 15 August and 6 September 2004 letters. Those letters
attempted to introduce new evidence, reargue the merits of the
case, and cast Mr. Dunn in a bad light. They are precisely the
type of communication 98 Formal Ethics Op. 13 described as risking
improper influence upon a tribunal. See 98 Formal Ethics Op. 13
("[I]nformal ex parte written communications, whether addresseddirectly to the judge or copied to the judge as in this inquiry,
may be used as an opportunity to introduce new evidence, to argue
the merits of the case, or to cast the opposing party or counsel in
a bad light."). Judge Craig did not, therefore, err in concluding
that these letters violated the Revised Rules of Professional
Conduct.
[10] Judge Craig also concluded that Mr. Ballinger violated
Rule 1.7(a)(1) and Rule 1.8(g) of the Revised Rules of Professional
Conduct. Rule 1.7(a) provides that "a lawyer shall not represent
a client if the representation involves a concurrent conflict of
interest." Rule 1.8(g) provides that "[a] lawyer who represents
two or more clients shall not participate in making an aggregate
settlement of the claims of or against the clients, . . . unless
each client gives informed consent, in a writing signed by the
client."
We agree with Mr. Ballinger that the record contains no
evidence suggesting that Mr. Ballinger's representation of several
of the Canoy children involved a concurrent conflict of interest or
that he failed to have the necessary informed consent from his
clients regarding the aggregate settlement. Nor do those findings
of fact not assigned as error support the conclusion that Mr.
Ballinger violated these provisions of the Rules of Professional
Conduct. Judge Craig appeared to be focusing on Mr. Ballinger's
conduct during the September hearings, but that conduct does not
necessarily violate Rule 1.7(a) or Rule 1.8(g). [11] Judge Craig, however, also concluded that Mr. Ballinger
violated Rule 8.4(d), which provides that it is professional
misconduct for a lawyer to "engage in conduct that is prejudicial
to the administration of justice." Judge Craig's numerous findings
regarding Mr. Ballinger's letters, his attempts "to reopen
virtually all of the points of contention . . . that had been laid
to rest during the negotiation of the settlement on June 10," and
Mr. Ballinger's behavior at the hearings provide ample support for
Judge Craig's conclusion that Mr. Ballinger violated this rule.
In sum, with respect to the imposition of sanctions under the
trial court's inherent powers, we conclude that Judge Craig erred
when he determined that Mr. Ballinger's 15 and 16 June 2004 letters
violated 98 Formal Ethics Op. 13 and that Mr. Ballinger's
representation violated Revised Rules of Professional Conduct
1.7(a)(1) and 1.8(g). We conclude Judge Craig did not err,
however, when he concluded that Mr. Ballinger's 15 August and 6
September 2004 letters violated 98 Formal Ethics Op. 13 and that
Mr. Ballinger's conduct violated Revised Rule of Professional
Conduct 8.4(d).
Although "'questions of propriety and ethics are ordinarily
for the consideration of the [North Carolina State] Bar' because
that organization was expressly created by the legislature to deal
with such questions, . . . the power to regulate the conduct of
attorneys is held concurrently by the Bar and the court." Gardner
v. N.C. State Bar, 316 N.C. 285, 287-88, 341 S.E.2d 517, 519 (1986)
(quoting McMichael v. Proctor, 243 N.C. 479, 485, 91 S.E.2d 231,235 (1956)). The trial court's proper conclusions regarding Mr.
Ballinger's violations of the Revised Rules of Professional Conduct
justify the imposition of sanctions under the court's inherent
powers, and Mr. Ballinger has failed to demonstrate that the court
abused its discretion in doing so.
IV
[12] Finally, Mr. Ballinger contends that the trial court
erred with respect to the amount of the sanctions imposed. In
reviewing the appropriateness of a particular sanction under either
Rule 11 or the inherent powers of the court, we exercise an abuse
of discretion standard.
Turner, 325 N.C. at 165, 381 S.E.2d at 714
(Rule 11);
Couch, 146 N.C. App. at 667, 554 S.E.2d at 363 (inherent
powers).
The trial court in the present case sanctioned Mr. Ballinger
$5,000.00, explaining only that this sum was to be paid to the
decedent's estate for "defraying the expenses and attorney fees
(excluding Mr. Ballinger's fees and expenses) that have arisen as
a result of the various hearings which were held after preparation
for and attendance at the June 10, 2004 hearing." Judge Craig's
findings of fact are not sufficient to permit this Court to review
the sanction imposed. The order on appeal does not explain why the
figure of $5,000.00 was selected or why the trial court considered
it an appropriate sanction. Although the order directs that the
amount be paid to the estate to defray attorneys' fees and
expenses, the order contains no findings regarding the fees and
expenses incurred. A trial court, in making an award of attorneys' fees, must
explain why the particular award is appropriate and how the court
arrived at the particular amount.
See,
e.g.,
Davis v. Wrenn, 121
N.C. App. 156, 160, 464 S.E.2d 708, 711 (1995) (reviewing an award
of fees under Rule 11),
cert. denied, 343 N.C. 305, 471 S.E.2d 69
(1996). Specifically, "an award of attorney's fees usually
requires that the trial court enter findings of fact as to the time
and labor expended, skill required, customary fee for like work,
and experience or ability of the attorney based on competent
evidence."
Couch, 146 N.C. App. at 672, 554 S.E.2d at 366
(remanding for further findings with respect to an award of fees
under the inherent power of the court).
The dissent contends that "this case involves a purely
punitive sanction," and, as a result, no findings of fact were
necessary for this Court to evaluate the appropriateness of the
sanction. The disagreement between this opinion and the dissent,
however, illustrates why additional explanation is necessary.
Nowhere in the order does the trial court identify this sanction as
"a purely punitive sanction," if that was indeed the trial court's
intent. On the other hand, the order states that at least one of
the sanction's purposes is to compensate other parties for
attorneys' fees and expenses. We cannot, therefore, determine from
the face of the order the precise nature of the sanction.
Even if the trial court intended that this sanction be a flat
monetary amount untied to any specific attorneys' fees, our case
law has never held that appropriate findings of fact _ based oncompetent evidence _ are unnecessary to support a trial court's
choice of sanction.
See Hummer v. Pulley, Watson, King & Lischer,
P.A., 140 N.C. App. 270, 285, 536 S.E.2d 349, 358 (2000) (reversing
sanction of $2,500.00 imposed as compensation for an increase in
attorney's malpractice insurance deductible when the order
contained no finding that he had purchased such insurance and the
evidence did not support a finding that the increase was due to the
pending suit);
Davis, 121 N.C. App. at 160, 464 S.E.2d at 711
(reversing and remanding for additional findings when "there is
nothing in the order to explain the appropriateness of the sanction
imposed ($6,692 in attorney's fees) or to indicate how the court
arrived at that figure");
Rivenbark v. Southmark Corp., 93 N.C.
App. 414, 420-21, 378 S.E.2d 196, 200-01 (1989) (holding that
"sanctions may not be imposed mechanically," but "[r]ather, the
circumstances of each case must be carefully weighed so that the
sanction properly takes into account the severity of the party's
disobedience").
While the same findings of fact may not be necessary for a
flat monetary amount as for an award of attorneys' fees, there must
still be findings to explain, as
Davis holds, the appropriateness
of the sanction and, if it involves a monetary amount, how the
court arrived at that figure. Contrary to the suggestion of the
dissent, neither
Davis Lake Cmty. Ass'n v. Feldmann, 138 N.C. App.
322, 530 S.E.2d 870 (2000), nor
Oglesby v. S.E. Nichols, Inc., 101
N.C. App. 676, 401 S.E.2d 92,
disc. review denied, 329 N.C. 270,
407 S.E.2d 839 (1991), involving only modest sanctions of $400.00and $500.00 respectively, have any language holding otherwise. The
opinions contain no indication that the sanctioned parties in those
cases challenged the adequacy of the findings of fact regarding the
nature of the sanction. In fact,
Oglesby did not involve a
punitive sanction, but rather was an award "to pay expenses
incurred by defendant's attorney in responding to" the motion filed
in violation of Rule 11.
Id. at 681, 401 S.E.2d at 95.
In this case,
without any findings of fact regarding the
attorneys' fees and expenses incurred, it is impossible to
determine whether the $5,000.00 awarded to the estate for expenses
and fees "that have arisen as a result of the various hearings
which were held after preparation for and attendance at the June
10, 2004 hearing" exceeds the reasonable fees and expenses actually
incurred. While the actual fees and expenses may well be less than
$5,000.00, we cannot assume that to be the case on appeal. In the
event that the sum exceeds the actual, reasonable fees and
expenses, there is no explanation as to why the trial court feels
that the excess should be awarded to the estate.
See Lowder v. All
Star Mills, Inc., 103 N.C. App. 500, 501, 405 S.E.2d 774, 775
(upholding Rule 11 sanction awarding $2,918.82 in attorneys' fees
and expenses and an additional $1,000.00 to be paid to the clerk of
superior court as an additional sanction),
disc. review denied, 330
N.C. 118, 409 S.E.2d 595 (1991). Only if the trial court includes
findings of fact regarding how it came to choose the particular
sanction imposed can this Court determine whether or not the
sanction represents an abuse of discretion.
Cf. Spicer v. Spicer,168 N.C. App. 283, 287, 607 S.E.2d 678, 682 (2005) (holding that,
even under an abuse of discretion standard, "[t]he trial court must
. . . make sufficient findings of fact and conclusions of law to
allow the reviewing court to determine whether a judgment, and the
legal conclusions that underlie it, represent a correct application
of the law").
We, therefore, affirm the trial court's imposition of
sanctions against Mr. Ballinger. We remand, however, for further
findings on the issue of the extent of the sanction.
Affirmed in part, reversed and remanded in part.
Judge McGEE concurs.
Judge CALABRIA concurs in part and dissents in part in a
separate opinion.
CALABRIA, Judge, concurring in part and dissenting in part.
I concur with the majority opinion in parts I through III. I
respectfully dissent on the issue of whether additional findings
were required to support the amount of a punitive sanction.
This Court reviews an order imposing a Rule 11 sanction de
novo. Turner v. Duke Univ., 325 N.C. 152, 165, 381 S.E.2d 706, 714
(1989). Specifically, we determine 1) whether the trial court's
conclusions of law support its judgment or determination, 2)
whether the trial court's conclusions of law are supported by its
findings of fact, and 3) whether the findings of fact are supported
by sufficient evidence. Id. After this Court determines a Rule 11
sanction was properly imposed, then the amount of the sanction isreviewed for an abuse of discretion. Id., 325 N.C. at 165, 381
S.E.2d at 714. “Under the abuse-of-discretion standard, we review
to determine whether a decision is manifestly unsupported by
reason, or so arbitrary that it could not have been the result of
a reasoned decision.” Mark Group Int'l, Inc. v. Still, 151 N.C.
App. 565, 566, 566 S.E.2d 160, 161 (2002).
Specific findings of fact are required for this Court to
conduct a de novo review of the imposition of sanctions. However,
the trial court is not required to make additional findings
regarding the amount of the properly imposed sanction.
The majority quotes Spicer v. Spicer, 168 N.C. App. 283, 607
S.E.2d 678 (2005), to support its contention that findings of fact
must be made regarding the monetary amount of a sanction. However,
the majority's reliance upon Spicer is misplaced. The majority
opines that Spicer held that “even under an abuse of discretion
standard, 'the trial court must, however, make sufficient findings
of fact and conclusions of law to allow the reviewing court to
determine whether a judgment, and the legal conclusions that
underlie it, represent a correct application of the law.'” Upon a
thorough reading of Spicer, it is clear that the above quoted
language applied only to the review of a child support order which
deviated from the guidelines for further findings about the child's
specific needs. See Spicer, 168 N.C. App. at 287, 607 S.E.2d at
682. There is no indication that the language quoted by the
majority bears directly or indirectly upon the imposition of
sanctions. I also disagree with the majority's reliance upon Davis v.
Wrenn, 121 N.C. App. 156, 464 S.E.2d 708 (1995), cert. denied, 343
N.C. 305, 472 S.E.2d 69 (1996). In Davis, the trial court failed
to make findings of fact supporting an imposition of a sanction
based upon the plaintiff's alleged Rule 11 violations. Id., 121
N.C. App. at 160, 464 S.E.2d at 711. This Court remanded the case
to the trial court for findings of fact to support imposing a Rule
11 sanction. In so doing, this Court also noted that the trial
court failed to make findings regarding the amount of attorney's
fees. Id. However, Davis did not specifically hold that findings
of fact must be made regarding the amount of an imposed sanction
regardless of the nature of the sanction.
The court in the case before us ordered a purely punitive
sanction to defray the Estate of Myrtle Greeson Canoy's expenses
and attorney's fees. Unlike the award of attorney's fees in Davis,
the sanction in this case was imposed to “punish Mr. Ballinger for
his misconduct.” As such, no findings were necessary to determine
the attorney's time and labor expended, skill required, customary
fee for like work, and experience or ability.
Our courts have previously upheld a punitive sanction without
requiring specific findings of fact as to the amount of the
sanction. Davis Lake Community Ass'n v. Feldmann, 138 N.C. App.
322, 323, 530 S.E.2d 870, 871 (2000) (trial court's sanction of
$400.00 for rule violations upheld with no mention of requiring
findings of fact as to the amount); Oglesby v. S.E. Nichols, Inc.,
101 N.C. App. 676, 681, 401 S.E.2d 92, 95 (1991) (trial court'ssanction of $500.00 to pay “to the clerk of superior court for the
use and benefit of defendant's counsel” upheld with no analysis
regarding the findings of fact). The majority distinguishes Davis
Lake Community and Oglesby by calling the sanctions “modest
sanctions.” However, in these cases, the court had discretion to
determine whether a “modest sanction” or any sanction was
warranted.
In Ward v. Lyall, 125 N.C. App. 732, 482 S.E.2d 740 (1997), we
examined the appropriateness of a purely punitive monetary sanction
of $8,500.00 imposed for not only Rule 11 violations but also
failing to promptly serve a summons and complaint. We held that
failure to promptly serve a complaint and summons was not a
violation within the scope of Rule 11, and the trial court's
imposition of sanctions, which included these violations, was not
properly imposed. Id., 125 N.C. App. at 735, 482 S.E.2d at 742.
Remand was necessary to separate a proper sanction from an improper
sanction. We reasoned:
The trial court's order states that it arrived
at the appropriate monetary sanction imposed
upon plaintiff by generally considering, inter
alia, the severity of the violations and the
amount necessary to deter further misconduct.
Since the trial court did not impose separate
sanctions for each type of misconduct, it is
impossible for us to determine how much of the
$8,500.00 in monetary sanctions stemmed from
the trial court's improper sanctioning of
plaintiff for his actions in serving the
summons and complaint. For this reason, we
remand this matter to the trial court for a
new hearing to determine the appropriate
amount of sanctions to be imposed under Rule
11.
Id., 125 N.C. App. at 735, 482 S.E.2d at 742-43.
In the case before us, the majority has determined that the
order contained adequate findings of fact to support the imposition
of sanctions. Specifically, the trial court found that Ballinger
did not obtain the consent of the parties before mailing letters
along with an unsolicited draft of the consent judgment to the
judge. Also, Ballinger wrote additional letters to the court
refusing to sign the consent judgment prepared by Mr. Dunn. In the
letters, Mr. Ballinger also attempted to readdress issues that had
been resolved in open court when his clients gave their consent to
the settlement. Ballinger again mailed a letter in which he
refused to sign any consent agreement. During a 16 September 2004
hearing, Ballinger stated that he had not “at any time refused to
consent to the judgment and will sign the thing today.” Ballinger
then proceeded to sign the consent order on behalf of his clients,
but withdrew his signature when he was informed by the court that
signing the order would create a conflict of interest between him
and his clients.
The trial court's findings of fact demonstrate the severity of
Ballinger's rule violations and these same findings are sufficient
to support a finding that the sanction in this case was properly
imposed. Additionally, the trial judge explained in his order his
reason for imposing a $5,000.00 sanction.
The Court has considered the full panoply of
options available to it in considering whether
to impose sanctions against Mr. Ballinger,
including the lesser sanctions of reprimand or
censure, and running to more severe sanctions
such as the suspension of Mr. Ballinger's lawlicense or substantial monetary penalties of
up to $10,000. The Court concludes, in its
discretion, that a monetary sanction of $5,000
is appropriate under Rule 11 and the Court's
inherent authority over proceedings to punish
Mr. Ballinger for his misconduct . . . .
The findings made by the trial court and the reasoning in support
of imposing a sanction are not manifestly unsupported by reason or
so arbitrary that they could not have been the result of a reasoned
decision. On the contrary, the trial court's reasoning is
sufficient to allow us to determine that sufficient findings of
fact support the sanction imposed.
Since I believe the majority's decision requiring the court to
make specific findings of fact as to the amount of a punitive
sanction is not required by our statutes or case law, I
respectfully dissent on this issue.
Footnote: 1