Giles v. American General Finance, Inc.

229 F.R.D. 537, 2005 U.S. Dist. LEXIS 22656, 2005 WL 2008259
CourtDistrict Court, S.D. Mississippi
DecidedAugust 19, 2005
DocketNo. CIV.A. 4:02CV517LN
StatusPublished

This text of 229 F.R.D. 537 (Giles v. American General Finance, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Giles v. American General Finance, Inc., 229 F.R.D. 537, 2005 U.S. Dist. LEXIS 22656, 2005 WL 2008259 (S.D. Miss. 2005).

Opinion

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before the court on defendants’ “Third Motion to Show Cause” and their “Rule 11 and 28 U.S.C. § 1927 Motion Directed Only to the 58 Remaining Non-Arbitration Clause Plaintiffs.” The court has considered these motions, and now concludes that the motion to show cause should be granted to the extent it seeks dismissal of the claims of all remaining nonarbitration clause plaintiffs but denied to the extent it seeks a default judgment on defendants’ counterclaim against these plaintiffs. The motion for sanctions will likewise be denied. Relevant Proceedings

This case was originally filed in state court in November 2002 by 118 plaintiffs alleging predatory lending claims against defendants. The case was removed by defendants December 13, 2002. By order entered August 23, 2004, twenty-five plaintiffs were ordered to arbitrate their claims against defendants.1

Prior to that order, defendants had first served discovery requests in August 2003 and October 2003. Defendants wrote to plaintiffs’ attorney Charles E. Gibson III in December 2003 in an 'attempt to confer regarding the outstanding discovery requests, but received no response. Defendants again wrote to Mr. Gibson in March 2004 regarding their discovery requests. This time Mr. Gibson responded that discovery responses were not due, in his view, until a pending motion to compel arbitration had been decided. In light of Mr. Gibson’s response, defendants filed a motion to compel discovery responses as to the 93 plaintiffs who had no arbitration agreements. An order was entered in May 2004, granting the motion to compel, but when discovery responses still were not forthcoming in response to the court’s order, defendants moved in June 2004 to show cause for plaintiffs’ noncompliance with the court’s order. The magistrate judge entered an order February 23, 2005 granting the motion to show cause to the extent of amending the case management order, though he denied defendants’ request for dismissal as a sanction as “too draconian a punishment.”

On March 2, defendants provided plaintiffs’ counsel with a motion for sanctions they were proposing to file, in which defendants took the position that pursuant to Rule 11 and 28 U.S.C. § 1927, sanctions were in order against all the remaining plaintiffs (the nonarbitration plaintiffs) and their counsel because the plaintiffs were seeking the continued prosecution of their claims, despite the fact that recent decisions of the Fifth Circuit and Mississippi Supreme Court had made it plain that plaintiffs’ claims are not viable as a matter of law.

Upon receipt of that letter, plaintiffs’ attorney, Charles Gibson III, immediately sent a letter to each of the remaining plaintiffs advising them that in light of recent court decisions, his firm had “determined that there is very little potential for success in your lawsuit,” and seeking their approval to voluntarily dismiss their claims, failing which he would be moving to withdraw as their counsel. The letter included an agreement that plaintiffs could sign signifying their agreement to dismiss their remaining claims against defendants.

In response to Mr. Gibson’s letter, 20 plaintiffs voluntarily agreed to dismiss their claims,2 leaving 73 nonarbitration plaintiffs, [539]*539and on April 1, Mr. Gibson filed his motion to withdraw from representation of those plaintiffs. At the sane time, Mr. Gibson also filed a motion for protective order, asking that compliance with the magistrate judge’s February 2005 show cause order be excused in view of his efforts to secure the voluntary dismissal of all the plaintiffs’ claims and in view of his motion to withdraw.

A week later, defendants filed a second motion to show cause, again lamenting plaintiffs’ failure to respond to the outstanding discovery requests. Defendants acknowledged therein that 20 plaintiffs had voluntarily dismissed their claims, but maintained that in view of the looming June 3 deadline for discovery, the remaining plaintiffs’ “flouting of this Court’s second Order compelling them to respond to discovery is seriously prejudicing Defendants.” Defendants requested dismissal as a sanction, or in the alternative, an order barring plaintiffs from offering any evidence of damages at trial or in connection with any motions or other pretrial matters, or in the further alternative for amendment of the ease management order.

On April 27, the magistrate judge entered an order granting Mr. Gibson’s motion to withdraw, conditioned on his payment of $2500 as a sanction for discovery abuses (representing payment of defendants’ fees for having to file the motion to compel). He denied the defendants’ Rule 11/ § 1927 motion for dismissal on the basis that he lacked authority over that request, and advised that an appropriate motion requesting such relief could be specifically directed to the undersigned.

Thereafter, on May 4, defendants filed their “Third Motion to Dismiss” the claims of the remaining 73 plaintiffs as a sanction for their failure to respond to the outstanding discovery requests. By that motion, defendants asked that the court not only dismiss the claims of all these plaintiffs, but also requested entry of a default judgment on their counterclaim against all the nonarbitration plaintiffs (including those who had voluntarily dismissed their claims in response to Mr. Gibson’s letter). That counterclaim included not only a request for a declaratory judgment that they bear no liability to plaintiffs as a result of their respective loan and insurance transactions, but also included a claim against plaintiffs for violation of Mississippi’s Litigation Accountability Act, Miss. Code Ann. § 11-55-1, pursuant to which defendants sought to recover their attorneys’ fees and costs incurred in defending the action.

Over the several weeks after that motion was filed, another 15 plaintiffs agreed to dismiss their claims.3 However, as of the beginning of June, there were 58 plaintiffs who had not affirmatively agreed to dismiss their claims. In light of that, on June 2, defendants filed a motion for sanctions pursuant to Rule 11 and 28 U.S.C. § 1927 against the remaining 58 plaintiffs (and any new counsel they might retain) on the basis that those plaintiffs had not agreed to dismiss their claims but were “seeking the continued prosecution of their claims, despite the fact that multiple decisions of the Fifth Circuit Court of Appeals and the Mississippi Supreme Court make it plain that these claims are not viable as a matter of law.” As defendants made clear, this motion was not directed at the Gibson law firm or at the 35 plaintiffs who had ultimately voluntarily dismissed their claims in response to Mr. Gibson’s letter and the prior motion for Rule 11 sanctions.

Findings and Conclusions

With reference to defendants’ “Third Motion to Dismiss,” the court does agree that dismissal of plaintiffs’ claims is an appropriate sanction for the plaintiffs’ failure to respond to discovery requests.4

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Cite This Page — Counsel Stack

Bluebook (online)
229 F.R.D. 537, 2005 U.S. Dist. LEXIS 22656, 2005 WL 2008259, Counsel Stack Legal Research, https://law.counselstack.com/opinion/giles-v-american-general-finance-inc-mssd-2005.