Disability Support Alliance v. Heartwood Enterprises, LLC

Background

Heartwood Enterprises, LLC renewed its motion seeking attorney’s fees and non-taxable costs. It sought fees from Disability Support Alliance and Eric Wong under the Americans with Disabilities Act (ADA), the Minnesota Human Rights Act (MHRA), and Federal Rule of Civil Procedure 54(d). It also sought fees from the plaintiffs’ former attorney, Paul Hansmeier, under 28 U.S.C. § 1927, which permits a court to require an attorney to pay costs and fees caused by unreasonable and vexatious multiplication of court proceedings.

The motion renewed an earlier fee motion that the court had denied without prejudice while an appeal was pending. The plaintiffs did not respond to the renewed motion. An attorney representing Hansmeier responded only on Hansmeier’s behalf and expressly disclaimed representing the plaintiffs in this matter.

Fees Against the Plaintiffs

Under the applicable standard, a defendant may recover attorney’s fees from a plaintiff bringing a civil-rights claim when the claim was frivolous, unreasonable, or groundless, or when the plaintiff continued litigating after it clearly became so. Heartwood argued that the plaintiffs knew early in the case that removing the architectural barriers they challenged was not readily achievable under the ADA.

The court declined to award fees and costs against the plaintiffs under the ADA, the MHRA, or Rule 54(d). Although the court criticized the plaintiffs’ lack of diligence in discovery and had previously sanctioned them for untimely and insufficient disclosures, it viewed the readily-achievable issue as a factual dispute. Heartwood’s representation that barrier removal was not readily achievable did not establish that the plaintiffs had no basis to continue the lawsuit. The court also declined to hold the plaintiffs responsible for their lawyer’s failure to conduct the expected investigation.

Sanction Against Hansmeier

The court applied § 1927 to Hansmeier’s conduct. It found that he failed in his duties to the court by submitting an untimely and insufficient declaration from his brother in an effort to avoid summary judgment on the readily-achievable issue. The court also found that Hansmeier ignored his client’s discovery obligations and attempted to circumvent the Federal Rules, conduct that showed intentional or reckless disregard of his duties and amounted to unreasonable and vexatious litigation tactics.

Heartwood sought the full amount of its attorney’s fees and costs, which its initial filing placed at nearly $80,000 and which it said had increased during the appeal. The court found that imposing the entire amount was not appropriate because Hansmeier’s conduct, while serious, was not sufficiently egregious to justify the full award. Instead, the court ordered Hansmeier to personally pay $5,000 toward Heartwood’s attorney’s fees and non-taxable costs.

Disposition

The court ordered that Heartwood’s renewed motion for attorney’s fees and non-taxable costs was GRANTED in part and DENIED in part. Plaintiffs’ former attorney, Paul Hansmeier, was personally liable for $5,000 toward Heartwood’s attorney’s fees incurred in the matter.