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An attorney in a dispute over a surety bond has been hit with $9,017 in sanctions after raising the ire of a Southern District of New York judge, who called the lawyer’s tactics “sleazy.” It was not just the fact that attorney Alfred Ferrer III filed an unwarranted order to show cause, U.S. District Judge John S. Martin said, it was when he filed it. “Dante should have reserved a special place in hell for lawyers who file unwarranted orders to show cause on the eve of a holiday,” Martin said. “Since such a divine sanction is not immediately available, the Court must consider whether 28 U.S.C. Section 1927 can provide an adequate remedy for the party required to respond to such an order to show cause.” Judge Martin said the order to show cause presented by Ferrer on Dec. 23, 1999, on behalf of his client, Chatham Partners Inc., sought to force Fidelity and Deposit Company of Maryland to pay $4.5 million that was allegedly due on a surety bond issued to secure a judgment of $320,148 obtained in New York State Supreme Court. Martin said there were two problems with the order, the first being that “the bond was by its terms clearly limited to the amount of $374,145 and there was no basis for holding the surety to any higher amount.” In fact, Judge Martin said, a different counsel for Chatham Partners, appearing in an earlier proceeding before a different judge, had acknowledged that the surety bond did not guarantee more than the face amount. “Second, even if a non-frivolous argument could be made in support of a claim for a higher amount, there was no basis for an injunction when all that was sought was money damages,” he said. “Not surprisingly, none of the authorities cited by plaintiff’s counsel supported his application for such extraordinary relief.” Martin said that when he first saw the order to show cause, he called it a “fraudulent claim.” “This to me is perhaps the most outrageous case I have had in a long time,” he said. “One, it is filed without precedent for an order to show cause. It is to me sleazy tactics.” Because defense counsel William R. Mait, of Mait, Wang & Simmons in New York, did not file a notice for sanctions under Rule 11 of the Federal Rules of Civil Procedure, Judge Martin said he was unable to order a sanction under that rule against Ferrer, an attorney with Eaton & Van Winkle in New York. So the judge, at the request of Mait, turned to �1927, which allows for sanctions against an attorney who “multiplies the proceedings in any case unreasonably and vexatiously.” At first, given the policy considerations that underlie the safe harbor provision in Rule 11, which gives attorneys with notice 21 days to withdraw an offending application, Judge Martin said, “it seems inappropriate to use 28 U.S.C. Section 1927 to do what the Court cannot do under Rule 11.” But those policy concerns, he said, “are not implicated” where a judge is considering sanctions for an “unwarranted order to show cause.” “Since the order to show cause was filed on Dec. 23 and was originally returnable on Dec. 28, defendant could not have given plaintiff’s counsel 21 days to withdraw his application,” he said. “Moreover, there is no reason to believe that some shorter notice period would have been effective or could have spared the defendant the necessity of preparing responsive papers.” Therefore, Martin said, “it is entirely appropriate to require plaintiff’s counsel to reimburse” the defendant for the $9,017 in attorneys’ fees and costs spent in responding to the order to show cause.

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