Kaass Law v. Wells Fargo Bank

The plain language in 28 U.S.C. § 1927 does not authorize sanctions against a law firm.

Attorney Armen Kiramijyan with Kaass Law filed a complaint (on behalf of Izabell Manukyan) against numerous defendants alleging defendants reported adverse information to credit agencies that then adversely effected Manukyan’s credit report. One of the defendants, Wells Fargo Bank (Wells Fargo), filed a 12(b)(6) motion to dismiss complaint. Kiramijyan failed to respond to motion, however he filed a motion to amend the initial complaint and attached a proposed first amended complaint. Accordingly, Wells Fargo filed a notice of non-opposition to its motion to dismiss and was subsequently granted dismissal. Manukyan’s motion to amend was denied because the complaint, as a whole, was procedurally deficient and the amended complaint did not rectify any failures to comply. Thereafter, Wells Fargo filed a motion to recover attorney’s fees and cost from Kaass Law pursuant to 28 U.S.C. § 1927, wherein § 1927 authorizes sanctions against “any attorney or other person admitted to conduct cases in any court of the United States or any Territory.” The district court granted the motion and awarded Wells Fargo sanctions against Kaass Law because it found that Kaass Law acted in bad faith by knowingly raising frivolous arguments against defendants and for failing to properly amended complaint, thereby recklessly and knowingly multiplying the proceedings. On appeal, the Ninth Circuit Court reversed the decision, finding the district court abused its discretion, and vacated the order. The panel reasoned, citing sister circuit courts, that the plain language in § 1927 does not authorize sanction against a law firm. The “specificity and precision” of § 1927 authorizing sanctions only against “attorneys” or “other person admitted to conduct cases” was designed to exclude sanctions against a law firm. REVERSED.