IRMA GONZALEZ, District Judge
Presently before the Court are Lynn J. Hubbard and Barbara J. Hubbard's ("plaintiffs") motion for attorney's fees and costs (Doc. No. 59.), and defendant Stancil G. Jones' ("defendant Jones") motion for sanctions against defendant Yardage Town. (Doc. No. 47.) For the following reasons, the Court grants plaintiffs' motion for fees and costs and defendant Jones' motion for sanctions.
BACKGROUND
A. Factual History
Plaintiffs filed this lawsuit after encountering physical and intangible barriers at Yardage Town Store which interfered with their ability "to use and enjoy the goods, services, privileges, advantages, and accommodations offered at the store." (Compl. at ¶ 10.) Plaintiffs refuse to patronize the store for fear of future injury. (Id. at ¶ 11) Plaintiffs' complaint sought injunctive and declaratory relief; attorney's fees and costs; and damages as provided for by state laws protecting the rights of the disabled. (Compl. at Prayer for Relief.)
B. Procedural History
On June 21, 2005, Magistrate Judge Major conducted a Settlement Conference. At that time the parties reached a settlement and recorded the terms of the agreement. (Transcript of Settlement Conference at 3-7.) The parties also confirmed on the record that they understood and agreed to the terms in the settlement agreement. (Id. at 9-10.) Defendant Yardage Town agreed to pay plaintiffs $3000, and defendant Jones agreed to pay plaintiffs $2000, in addition to an already agreed upon damages award. (Id. at 5.) The parties later memorialized the settlement agreement. (Settlement Agreement attached to Plaintiffs' Brief in Support of Adhering to Terms of Settlement ("Settlement Agreement") (Doc. No. 18.))
Following the Settlement Conference, defendant Yardage Town, through it's attorney Mr. Peters, did not comply with the terms of the settlement agreement. Specifically, Mr. Peters sent plaintiffs a check for $1320, instead of $3000 as per the terms of the settlement. After receiving less than the agreed upon sum, plaintiffs notified the Court that the settlement was in jeopardy and the Court scheduled a Settlement Disposition Conference. On August 5, 2005, Magistrate Judge Major held a Settlement Disposition Conference. Mr. Peters argued defendant Yardage Town could not comply with the settlement agreement until plaintiffs agreed to fill out a W-9 tax form due to his contention that the damages award was income to plaintiffs. (Transcript of Settlement Disposition Conference at 2-4.) After hearing from all parties Magistrate Judge Major permitted plaintiffs and defendant Jones to file motions to enforce the settlement agreement and for sanctions.
Defendant Yardage Town provided Mr. Peters with the full $3000, but Mr. Peters withheld 28% of the damages award for tax purposes. The numbers suggest Mr. Peters twice withheld 28% from the $3000 damages award.
On November 29, 2005, Magistrate Judge Major issued a report and recommendation ("RR") addressing plaintiffs' motion to enforce the settlement agreement and plaintiffs' and defendant Jones' motions for sanctions and costs. (Doc. No. 43.) The RR recommended that the Court grant the motion to enforce the settlement agreement finding defendant Yardage Town's decision to withhold taxes from the damages award to be without legal foundation or merit. (RR at 20.) On December 16, 2005, defendant Yardage Town filed objections to the RR. (Doc. No. 45.) On December 22, 2005, defendant Jones filed a reply to the objections. (Doc. No. 47.) Plaintiffs subsequently joined the reply. (Doc. No. 49.)
Magistrate Judge Major also granted the motions for sanctions. Mr. Peters appealed that order directly to the Ninth Circuit Court of Appeals. (Doc. No. 44.) Mr. Peters has not sought review of Magistrate Judge Major's sanctions order in this Court.
On February 22, 2006, the Court held a hearing and ordered enforcement of the settlement agreement. The Court ordered defendant Yardage Town to pay plaintiff $1680.00 no later than 20 days after the hearing. The Court also permitted plaintiffs and defendant Jones to file motions for attorney's fees and costs associated with enforcing the settlement agreement. On February 27, 2006, defendant Jones filed supplemental briefing in support of his previous motion for sanctions against defendant Yardage Town. (Doc. No. 57, supplementing Doc. No. 47.) On March 9, 2006, plaintiffs filed a motion for attorney's fees and costs against defendant Yardage Town. (Doc. No. 59.) On April 3, 2006, defendant Yardage Town filed an opposition. (Doc. No. 62.) On April 10, 2006, plaintiffs filed a reply. (Doc. No. 63.) The matter is now fully briefed, and the Court finds it appropriate for disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1).
Defendant Yardage Town complied on March 22, 2006. (Exhibit 1 ISO Hubbard Decla. ISO Reply, Letter from Attorney Hubbard to Attorney Peters.)
DISCUSSION
A. Legal Standard
Pursuant to 28 U.S.C. section 1927, the Court may require an attorney who "multiplies the proceedings in any case unreasonably and vexatiously" to personally pay the attorneys fees and costs reasonably incurred because of such conduct. Pacific Harbor Capital v. Carnival Airlines Inc., 210 F.3d 1112, 1118 (9th Cir. 2000) ("Section 1927 authorizes imposition of sanctions against any lawyer who wrongfully proliferates litigation proceedings once a case has commenced"). Sanctions may be imposed under section 1927 when an attorney acts in bad faith or acts with recklessness and an improper purpose, frivolousness, or to harass the opposing party. B.K.B. v. Maui Police Dep't, 276 F.3d 1091, 1107 (9th Cir. 2002); Fink v. Gomez, 239 F.3d 989, 993 (9th Cir. 2001).
B. Legal Analysis
1. Imposition of Sanctions
Plaintiffs seek an award pursuant to either section 1927 or the Court's inherent power to impose sanctions. Plaintiffs argue that defendant Yardage Town's counsel, Mr. Peters, unreasonably multiplied the litigation costs in this case by arguing tax law inapplicable to the settlement agreement. (Memorandum of Points and Authorities in Support of plaintiffs' motion for costs (Memo. ISO Motion") at 14.) Plaintiffs contend that counsel's baseless argument delayed settlement entitling plaintiffs to expenses associated with enforcing the settlement agreement. (Id. at 15.) Defendant Jones argues that his additional costs also "would not have occurred had Mr. Peters relinquished his activities to withhold amounts in settlement to which his client, Yardage Town, had agreed to pay." (Walters Decla. ISO Supplemental Briefing for Jones' Motion for Sanctions ¶ 11.) Defendant Jones contends that he was forced to continue to litigate this case, after reaching a settlement, to "protect against possible adverse results" stemming from defendant Yardage Town's failure to comply with the settlement agreement. (Id.)
Defendant Yardage Town argues that plaintiffs' expenses are excessive and that defendant Jones' claims charges that "exceed the amount of time reasonably necessary to protect his client's interests." (Opp. at 6.) Defendant Yardage Town also contends that because "it is impossible for respondent to determine whether the asserted charges represent work already billed . . . as part of the original $15,000 awarded by Magistrate Judge Major . . . time entries which are not attributable with certainty to the appearance or reasonably necessary for it should be denied." (Id. at 6-7.)
The Court notes that the majority of defendant Yardage Town's opposition to the pending motions for attorney's fees and sanctions has little to do with potential awards. Instead, defendant Yardage Town's counsel took another opportunity to rehash his position on the tax reporting required for plaintiffs' form settlement agreements. (Opp. at 2-5.) Defendant Yardage Town also urges the Court to "reconcile" what "appears to be a direct split of opinion — on identical tax issues — between the position(s) taken by this Court and Magistrate Judge Battaglia," in two different cases. (Id. at 2.) The Court declines the invitation of Yardage Town.
Under Ninth Circuit law the Court may impose section 1927 sanctions against an attorney who knowingly acted recklessly to unreasonably multiply or extend the litigation. B.K.B., 276 F.3d at 1107. Mr. Peters did just that when he withheld the agreed upon settlement sum from plaintiffs. First, Mr. Peters withheld the funds despite the fact that defendant Yardage Town, his client, was not "actively involved in the decision to withhold the 28% per payee from the initial settlement agreement." (Opp. at 5-6.) Specifically, Mr. Peters informs the Court that he did not "consult [with his clients] about whether or not to actually withhold the amount from the payment to the plaintiff." (Id.) That is, counsel, in an effort to derail the settlement agreement, singularly ignored the terms of the agreement without his client's consent. Defendant Yardage Town intended to comply with the settlement agreement, Mr. Peters did not. Therefore, the Court finds that Mr. Peters knowingly and recklessly withheld settlement funds without authority from his client and in direct conflict with the terms of the settlement agreement signed by his client.
The settlement agreement called for compensation for personal injuries purportedly suffered. Damages from personal injury lawsuits are not taxable income. Mr. Peter's position is that the damages were for discriminatory practices and therefore are taxable income, despite the express terms in the settlement agreement signed by his client.
Second, defendant Yardage Town unreasonably multiplied and extended the litigation when it failed to comply with the settlement agreement. 28 U.S.C. § 1927. Following defendant Yardage Town's decision to ignore the terms of the settlement agreement, which all parties signed, plaintiffs and defendant Jones were required to attend a Settlement Disposition Conference before Magistrate Judge Major, respond to defendant Yardage Town's objections to Magistrate Judge Major's subsequent RR, and attend a hearing before this Court for an order enforcing the settlement agreement.
2. Amount of Sanctions
In a declaration submitted December 30, 2005, plaintiffs' counsel (Attorney Hubbard) asked the Court to impose sanctions against Mr. Peters in the amount of $1440.00 to compensate plaintiffs for litigation costs incurred to enforce the settlement agreement. (Hubbard Decla. ISO Joinder to Defendant Jones' Reply to Objections to RR ¶ 4.) Attorney Hubbard also submitted detailed billing records indicating the hours spent on reviewing Magistrate Judge Major's RR, defendant Yardage Town's objections, and other work associated with enforcing the settlement agreement. (Exhibit A ISO Hubbard Decla. ISO Joinder.) On March 9, 2006, Attorney Hubbard submitted a second declaration in support of sanctions asking the Court to compensate his clients for costs incurred related to the hearing before this Court, for attorney hours spent researching and drafting this motion for sanctions, and for attorney hours spent "attempting to cajole Mr. Peters and his clients into complying" with the settlement agreement. (Hubbard Decla. ISO Motion for Fees and Costs ¶¶ 2-6.) In total, Attorney Hubbard seeks an award of $10,120 in fees. (Id. at ¶ 6.)
Plaintiffs joined defendant Jones' reply to defendant Yardage Town's objections. (Doc. No. 49.)
On December 22, 2005, defendant Jones' counsel (Attorney Walters) submitted a declaration to the Court setting forth costs incurred by his client in reviewing and responding to defendant Yardage Town's objections to Magistrate Judge Major's RR. Attorney Walters also submitted a detailed bill indicating his client incurred costs totaling $4131.33, in order to enforce the settlement agreement. (Exhibit A ISO Walters Decla. ISO Reply to Objections to RR ¶ 4.) On February 28, 2006, Attorney Walters submitted a second declaration including attorney hours spent preparing for the February 22, 2006, hearing, attendance at the hearing, and preparation of supplemental briefing for fees. (Walters Decla. ISO Supplemental Briefing for Sanctions ¶ 9.) Attorney Walters asks the Court to impose $8911.33 total in sanctions. (Id. at 11.)
Four thousand two hundred and eighty dollars of the total sought by Attorney Walters have already been considered by Judge Major in her own order imposing sanctions. (Doc. No. 43.)
The Court finds that Mr. Peters, counsel for defendant Yardage Town, must "satisfy personally" the following "attorney's fees reasonably incurred" because of his knowingly reckless conduct which unreasonably multiplied the proceedings in this case, 28 U.S.C. section 1927:
1. Mr. Peters is ordered to pay Attorney Hubbard $1440.00 for costs incurred to review and respond to defendant Yardage Town's objections to the RR.
2. Mr. Peters is ordered to pay Attorney Walters $4131.33 for costs incurred to review and respond to defendant Yardage Town's objections to the RR.
Accord Grinzi v. Barnes, 2005 U.S. Dist. LEXIS 33094, *2 (N.D. Cal. 2005) (granting plaintiffs' motion to enforce settlement and ordering defendants to reimburse plaintiffs "for attorneys fees plaintiffs incurred in connection with the motion to enforce the settlement agreement").
CONCLUSION
For the reasons set forth herein, the Court GRANTS plaintiffs' motion for attorney's fees and costs, and GRANTS defendant Jones' motion for sanctions. Mr. Peters is ordered to pay Attorney Hubbard $1440.00, and Attorney Walters $4131.33 within twenty days from when this order is stamped "filed."
IT IS SO ORDERED.