March 20, 2019

Archives for July 23, 2018

Application Period Open for Vacancy on Arapahoe County Court in 18th Judicial District

On Wednesday, July 18, 2018, the Colorado State Judicial Branch announced a vacancy on the Arapahoe County Court, occasioned by the appointment of Hon. Darren Vahle to the 18th Judicial District Court. The vacancy was effective July 16, 2018.

Applications are now being accepted for the upcoming vacancy. Eligible applicants must be qualified electors of Arapahoe County and must have been admitted to practice law in Colorado for five years. Application forms are available from the State Judicial website or from the ex officio chair of the 18th Judicial District Nominating Commission, Justice Richard Gabriel. Applications must be received no later than 4 p.m. on August 3, 2018; anyone wishing to nominate another must do so no later than 4 p.m. on July 27.

For more information about the vacancy, click here.

Tenth Circuit: Attorneys Who Withheld Information About Appraiser Properly Sanctioned

The Tenth Circuit Court of Appeals issued its opinions in Auto-Owners Ins. Co. v. Summit Park Townhome Association on March 30, 2018. The Tenth Circuit Court of Appeals VACATED its original opinions and issued the following revised opinions: Auto-Owners Ins. Co. v. Summit Park Townhome Ass’n, No. 16-1638, and Auto-Owners Ins. Co. v. Summit Park Townhome Ass’n, No. 16-1352.

Two attorneys, Mr. William Harris and Mr. David Pettinato, represented Summit Park Townhome Association against its insurer. The two attorneys were sanctioned for failing to disclose information to the district court. The attorneys appealed the sanction on these five arguments:

  1. The district court lacked authority to require the disclosure requirements.
  2. The attorneys did not violate the court’s disclosure requirements.
  3. The district court awarded attorneys’ fees beyond the scope of an earlier sanctions order.
  4. The district court’s award of attorneys’ fees resulted in a deprivation of due process.
  5. The amount of attorneys’ fees awarded was unreasonable.

The Tenth Circuit Court of Appeals AFFIRMED the district court’s actions in issuing sanctions, determining the scope of the sanctions, and calculating the amount of the sanctions.

The initial lawsuit was related to an insurance dispute following a claim filed by Summit Park with Auto-Owners Insurance for hail damage. The parties disagreed on the dollar amount of the damages, and Auto-Owners sued for a declaratory judgement to decide the value.

Summit Park attorneys Harris and Pettinato moved to compel an appraisal following the insurance policy requirements. Auto-Owners asked the district court to resolve the dispute over the dollar amount by ordering an “appraisal agreement.” The district court ordered the appraisal agreement and warned both parties that if the parties and/or counsel did not comply, the court would impose sanctions.

George Keys was the appraiser for Summit Park, and Auto-Owners questioned his impartiality. Mr. Keys and the court-appointed umpire both agreed on an appraisal award of over $10 million. Auto-Owners then objected to Mr. Keys based on impartiality and that Summit Park had failed to disclose evidence bearing on his impartiality. The court disqualified Mr. Keys and vacated the appraisal award. Auto-Owners then moved for sanctions against Mr. Harris and Mr. Pettinato, including attorney fees and expenses. The district court assessed sanctions against the two attorneys for $354,350.65 in fees and expenses.

Attorneys Harris and Pettinato questioned the district court’s authority to enter the disclosure order, and they refused to comply with the order. They could have sought reconsideration or a writ, but they could not violate the order. See Maness v. Meyers, 419 U.S. 449, 458 (1975) (“If a person to whom a court directs an order believes that order is incorrect the remedy is to appeal, but, absent a stay, he must comply promptly with the order pending appeal.”). Orders issued by a court must be obeyed by the parties until “reversed by orderly and proper proceedings.” United States v. United Mine Workers, 330 U.S. 258, 293 (1947); See United States v. Beery, 678 F.2d 856, 866 (10th Cir. 1982); and see also GTE Sylvania, Inc. v. Consumers Union of U.S., Inc, 445 U.S. 375, 386 (1980). Failure to comply with the court order could trigger sanctions. See United Mine Workers, 330 U.S. at 294 (quoting Howat v. Kansas, 258 U.S. 181, 190 (1922)), so Mr. Harris and Mr. Pettinato were obligated to comply in the absence of an appellate challenge, and could be sanctioned for noncompliance.

Attorneys Harris and Pettinato challenged the district court’s conclusion that they had violated the disclosure order by arguing that the district court misinterpreted the term “impartial” and that Harris and Pettinato disclosed sufficient information about Mr. Keys.

Because Mr. Harris and Mr. Pettinato urged a legal error consisting of misinterpretation of the term “impartial,” the Tenth Circuit Court of Appeals engaged in de novo review. Hamilton v. Boise Cascade Express, 519 F.3d 1197, 1202 (10th Cir. 2008), and it otherwise confined the review sanctions under the abuse-of-discretion standard. Russell v. Weicker Moving & Storage Co., 746 F.2d 1419, 1420 (10th Cir. 1984) (per curiam).

The district court requested disclosure of (1) the appraiser’s “financial or personal interest in the outcome of the appraisal,” (2) any “current or previous relationship” between the appraiser and Summit Park’s counsel, and (3) any other facts subsequently learned that “a reasonable person would consider likely to affect” the appraiser’s impartiality.

Harris and Pettinato made two disclosures:

  1. “Mr. Keys does not have any significant prior business relationship with [Merlin], Summit Park, or C3 Group. Mr. Keys has acted as a public adjuster and/or appraiser on behalf of policyholders that [Merlin] has represented in the past, however, this obviously does not affect his ability to act [as] an appraiser in the matter.” Appellant’s App’x, vol. 2 at 292.
  2. “Mr. Keys has acted as a public adjuster and/or appraiser on behalf of policyholders that [Merlin] has represented in the past. Mr. Keys has no financial interest in the claim, and has no previous relationship with the policyholder in this matter.” Id. at 298.

Mr. Keys made the following disclosure: “I do not have a material interest in the outcome of the Award and have never acted either for or against Summit Park Townhome Association. My fee agreement is based upon hourly rates plus expenses. . . . I do not have any substantial business relationship or financial interest in [Merlin]. There have been cases where both [Merlin] and Keys Claims Consultants acted for the same insured but under separate contracts.” Id. at 307-08.

Regardless of the district court’s definition of “impartial,” attorneys Harris and Pettinato failed to disclose that (1) other attorneys in their firm (Merlin Law Group) had worked with Mr. Keys on appraisals for at least 33 clients, (2) Merlin attorneys had represented Mr. Keys on various matters for over a decade, (3) Merlin’s founder and Mr. Keys had co-founded a Florida lobbying operation, and (4) Merlin attorneys had served as the incorporator and registered agent for one of Mr. Key’s companies.

Attorneys Harris and Pettinato claim they disclosed sufficient information about Mr. Keys’ impartiality and that they lacked personal knowledge about the undisclosed facts. Both of these arguments failed. The district court could reasonably find that the undisclosed information was meaningful, and Harris and Pettinato knew about some of Mr. Keys and Merlins contacts, and they had an obligation to inquire about contacts with other Merlin attorneys. Therefore, the district court acted within its discretion on Mr. Harris’ and Mr. Pettinato’s failure to disclose information.

As far as Mr. Harris’ and Mr. Pettinato’s argument over the district court’s definition of “impartial,” the disclosure order issued by the district court defined “impartial” by stating: “An individual who has a known, direct, and material interest in the outcome of the appraisal proceeding or a known, existing, and substantial relationship with a party may not serve as an appraiser.” Id. at 245.

Using the definition of “impartial” provided in the district court’s order, the district court required disclosure of any facts that a reasonable person would view as likely to affect the appraiser’s impartiality. Mr. Harris and Mr. Pettinato argued that evidence of an appraiser’s advocacy was unlikely to affect the appraiser’s impartiality. See Owners Ins. Co. v. Dakota Station II Condominium Ass’n, 2017 WL 3184568, at *4 (Colo. App. July 27, 2017), cert. granted, 2018 WL 948601 (Colo. Feb. 20, 2018). Even if Mr. Harris and Mr. Pettinato were correct, the district court could have reasonably viewed Mr. Keys’ undisclosed prior statements as likely to affect his impartiality based on a known, direct, and material interest in the outcome. Additionally, in an advertisement on Mr. Keys’ website, Mr. Pettinato endorsed Mr. Keys, saying: “Both Mr. Keys and his staff have assisted me as well as my firm in resolving an untold number of large multi-million dollar losses to an amicable resolution and settlement to the policyholders’ benefit and satisfaction.” Id. at 704. And a profile on Merlin’s website reported that Mr. Keys “ha[d] dedicated his professional life to being a voice for policyholders in property insurance claims.” Id. at 723. In this profile, Mr. Keys stated: “I was taught to always handle a claim as if my momma was the insured.” Id.

Therefore, the district court did not abuse its discretion by finding that Mr. Harris and Mr. Pettinato had violated the disclosure order.

Mr. Harris and Mr. Pettinato argued that Auto-Owners waived the right to object by failing to object despite their knowledge of past relationships between Merlin and Mr. Keys. The Tenth Circuit disagreed, because without the undisclosed information, Auto-Owners would not have had full knowledge of the relationship.

For the sanction against the two attorneys, the district court invoked 28 U.S.C. § 1927. Under § 1927, an attorney “who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” 28 U.S.C. § 1927. The two attorneys argued that these three items fell outside of the initial sanctions order: (1) Auto-Owners’ preparation of the motion for sanctions ($51,309.50), (2) Auto-Owners’ preparation of the application for attorneys’ fees and expenses ($16,960.50), and (3) Auto-Owners’ other related work ($61,662.50).

The Tenth Circuit disagreed with those arguments, because the district court explained the attorney fees in the sanctions order. Therefore, the Tenth Circuit deferred to the district court’s interpretation of its own order. See, e.g., Chi., Rock Island & Pac. R.R. v. Diamond Shamrock Ref. & Mktg. Co., 865 F.2d 807, 811 (7th Cir. 1988) (“We shall not reverse a district court’s interpretation of its own order ‘unless the record clearly shows an abuse of discretion.’” (quoting Arenson v. Chicago Mercantile Exch., 520 F.2d 722, 725 (7th Cir. 1975))). The Tenth Circuit found it reasonable for the district court to consider these litigation expenses.

The fifth area that Mr. Harris and Mr. Pettinato questioned was a deprivation of due process based on an inability to respond to the district court’s inclusion of litigation activities outside of the initial sanctions order. The Tenth Circuit disagreed because they could have objected to any of the attorney fees included on the Auto-Owners application that was filed. This opportunity supplied due process. See Resolution Tr. Corp. v. Dabney, 73 F.3d 262, 268 (10th Cir. 1995); see also Auto-Owners Ins. Co. v. Summit Park Townhome Ass’n, No. 16-1352, slip op. at 17-19 (10th Cir. Mar. 30, 2018) (to be published) (discussing a similar argument made by Summit Park Townhome Association).

The last argument was that the court awarded an unreasonable about of attorney fees. The Tenth Circuit reviewed a determination of attorney fees for an abuse of discretion. See AeroTech, Inc. v. Estes, 110 F.3d 1523, 1528 (10th Cir. 1997). In applying the abuse-of-discretion standard, the Circuit considered whether the district court’s determination appeared reasonable in light of the complexity of the case, the number of strategies pursued, and the responses necessitated by the other party’s maneuvering. See Robinson v. City of Edmond, 160 F.3d 1275, 1281 (10th Cir. 1998). The district court was not required to identify and justify every hour allowed or disallowed. See Malloy v. Monahan, 73 F.3d 1012, 1018 (10th Cir. 1996).

Based on the Tenth Circuit’s review, the district court considered three areas when determining reasonableness of fees. First, the district court concluded that it was reasonable for Auto-Owners’ counsel to spend long hours because “Auto-Owners had over $30 million at stake” and the issues were complex. Appellants’ App’x, vol. 3 at 673-74. Second, the court considered the local market, the qualifications of the attorneys, and the contentiousness of the litigation. These considerations led the district court to find that the billing rates had been reasonable. Third, the court considered the use of billing judgment by Auto-Owners’ counsel through concessions such as staffing with lower-billing attorneys, declining to charge for all hours worked, and discounting hours worked by paralegals and secretaries. The district court acted reasonably in considering these concessions. The Tenth Circuit concluded that the district court did not abuse its discretion in calculating the amount of the sanction ($354,350.65).

The Tenth Circuit Court of Appeals concluded that the district court did not err in sanctioning Mr. Harris and Mr. Pettinato, that Mr. Harris and Mr. Pettinato violated the district courts order by failing disclose information bearing on Mr. Key’s impartiality, and that the amount set by the district court was reasonable.

Tenth Circuit: “Crime Involving Moral Turpitude” is Conduct Which Is Inherently Base, Vile, or Depraved Under Categorical Approach

The Tenth Circuit Court of Appeals issued its opinion in Afamasaga v. Sessions on March 19, 2018.

Paulo Afamasaga, a native and citizen of Samoa, was admitted to the United States on a nonimmigrant, B-2 tourist visa in February 1998, with authorization to remain until that August. He stayed much longer. In 2011, Mr. Afamasaga pleaded guilty in federal court to violating 18 U.S.C. § 1542, which prohibits “willfully and knowingly making any false statement in an application for a passport with intent to induce or secure the issuance of a passport under the authority of the United States.” The indictment charged that Mr. Afamasaga falsely stated in his passport application that he was born in American Samoa; had that been true, he would have been a United States citizen. Shortly thereafter, the Department of Homeland Security (DHS) issued a Notice to Appear, charging him with removability as an alien who had remained in the United States longer than permitted. The immigration judge (IJ) sustained the change of removability.

Mr. Afamasaga applied for cancellation for removal and adjustment of status, or, in the alternative, for voluntary departure. The IJ dropped his cancellation application after deeming him inadmissible because he had been convicted of a crime involving moral turpitude. The IJ did, however, grant voluntary departure to Samoa. In a decision issued by a single board member the Board of Immigration Appeals (BIA) agreed that Mr. Afamasaga’s conviction for a violation of § 1542 constitutes a crime involving moral turpitude and affirmed the IJ’s decision.

A noncitizen applying for cancellation of removal must show, among other things, that he has not been convicted of a crime involving moral turpitude. In determining whether an alien’s offense was a crime involving moral turpitude, it is not enough that his actual conduct would qualify. Instead, courts apply the “categorical approach” and “compare the statutory definition of that offense with the generic definition of crimes involving moral turpitude and consider whether the minimum conduct that would satisfy the former would necessarily also satisfy the latter.”

Although the Immigration and Nationality Act (INA) does not define “crime involving moral turpitude,” courts have guidance for defining it because “the contours of the term have been shaped through interpretation and application by the Attorney General, the BIA, and federal courts.” The Tenth Circuit Court of Appeals has previously said that the term “refers to conduct which is inherently base, vile, or depraved, contrary to the accepted rules of morality.” Previous Attorneys General have described offenses that qualify as crimes involving moral turpitude as those entailing both “reprehensible conduct and some form of scienter.” Precedents established rules for assessing specific types of conducts. Specifically, “crimes in which fraud is an ingredient are regarded as involving moral turpitude.” The BIA has identified three categories of deceit-related offenses that qualify as crimes involving moral turpitude: (1) offenses containing an explicit fraudulent intent element; (2) offenses containing an inherent fraudulent intent element; and (3) offenses containing a specific intent element. In particular, the BIA has found an offense implicitly fraudulent – and thus a crime involving moral turpitude – where it involved impairing or obstructing an important function of the government by defeating its efficiency or destroying the value of its lawful operations by deceit, graft, trickery, or dishonest means.

The BIA held in 1956 that fraud is an “essential element” of § 1542 because “the applicant must knowingly make a false statement with the specific intent that the false statement should be acted upon the Government.” More recently, a precedential opinion of the BIA held that a conviction for making false statements to obtain a passport in another person’s name is a crime involving moral turpitude because “convictions for making false statements have been found to involve moral turpitude.” Additionally, the Second Circuit has also concluded that an offense under § 1542 categorically constitutes a crime involving moral turpitude.

Agreeing with the above interpretations of the meaning of crime involving moral turpitude, the Tenth Circuit Court of Appeals concluded that a violation of § 1542 is categorically a crime involving moral turpitude.

Mr. Afamasaga made the conclusory statement that § 1542 is not categorically a crime involving moral turpitude because “there is a realistic possibility, not a theoretical possibility, that section 1542 applies to conduct that falls outside the well-established definitions of crime involving moral turpitude.” But he did not proffer a single example of such conduct, nor could the Tenth Circuit Court of Appeals come up with one.

The Tenth Circuit Court of Appeals recognized that one of its recent opinions, which thoroughly explored when offenses involving statements constitute crimes involving moral turpitude, held that a violation of a city ordinance prohibiting the knowing and willful providing of false information to a public official conducting an investigation is not a crime involving moral turpitude. But, the critical feature of the ordinance was that it did not require an intent to affect the official’s decision. Section 1542, in contrast, requires the “intent to induce or secure the issuance of a passport.”

Mr. Afamasaga did not satisfy his burden “to prove the absence of any impediment to discretionary relief.” The Tenth Circuit Court of Appeals DENIED his petition for review and upheld the BIA’s determination that he is not eligible for cancellation of removal.