• July 31, 2012

Update (July 31, 2012):  There is evidence that repeated and flagrant violations of Rule 11 of the Federal Rules of Civil Procedure is a bad business model.  

Original post (July 26, 2012):  Minnesota Litigator has previously reported on Minneapolis attorney William Butler’s wholly unsuccessful attempts to defend against foreclosure actions using the debunked “show me the note” theory (linked here). More recently, our coverage (linked here) has focused on sanctions of $100,000 leveled against Butler for asserting claims that were meritless and explicitly rejected by the Minnesota Supreme Court and the Court of Appeals for the Eighth Circuit.

If you’re sanctioned twice for bringing identical claims, don’t you think the court is trying to tell you something? Well, he didn’t listen. After Butler filed another suit, apparently attempting fly under the radar by not mentioning the “show me the note” defense explicitly, U.S. District Court Judge Ann Montgomery (D. Minn.) sanctioned Butler $75,000.  Judge Montgomery wisely read between the lines finding that Butler’s Complaint was, as Yogi Berra put it, “déjà vu all over again.”

In rejecting Butler’s claims, Judge Montgomery pointed to the Minnesota Supreme Court’s 2009 decision in Jackson v. Mortgage Electronic Registering Systems, Inc. and the Eighth Circuit’s decision in Stein v. Chase Home Finance, LLC. She noted that Butler’s continued attempts to assert claims under the “‘show me the note’ theory are unwarranted under existing law and are behavior which requires sanctions under Rule 11.”

Judge Montgomery did not try to sugarcoat her feelings toward Butler and his legal antics. Below are some selections from her bench-slap-laden Memorandum:

Butler’s insistence on re-litigating losing arguments is staggering, and it comes with a cost, because it multiplies the expense of litigation and monopolizes scarce judicial resources. Moreover, no one, not even Butler, can reasonably or competently believe in the merits of any of these arguments.  Butler’s persistent filing of frivolous arguments is egregious and merits sanctions under Rule 11.

Butler’s refusal to dismiss a complaint which never had any hope of succeeding, as well as his filing of a frivolous remand motion after Defendants moved for sanctions, all warrant attorneys’ fees incurred as a direct result of his blatant behavior.

Quoting Murphy v. Aurora Loan Service, LLC, where Butler was sanctioned for similar conduct:

Plaintiffs’ entire claim in this case is based on a legal fallacy that Plaintiffs’ counsel William Butler, Esq., has doggedly refused to acknowledge.

Summarizing why sanctions were warranted:

(1) the egregious and bad faith nature of Butler’s conduct; (2) the significant burden he has imposed on six defendants and their legal counsel; (3) Butler’s unflagged filing and continued litigation of claims which have been dismissed by every court to entertain them; (4) his utterly frivolous Motion to Remand; and (5) his cruel arousal of unrealistic hope in his clients, all of whom face foreclosure and for whom this is an extremely emotional issue.

When does being a zealous advocate for your client verge on shirking your ethical responsibilities as an attorney, particularly Minn. R. Prof. Conduct 3.1? Comment 1 to Rule 3.1 states the following: “The advocate has a duty to use legal procedure for the fullest benefit of the client’s cause, but also a duty not to abuse legal procedure.” Has Butler played fast and loose with his license by bringing these claims over and over? Alternatively, is he merely attempting to represent his clients in the best way he can – by challenging legal precedent in the hopes that a court will find in his favor? Personally, I’m shocked that a solo practitioner has been sanctioned over $100,000 without changing his behavior.

Beyond the legal and ethical questions raised by this case, there are some practical pointer that lawyers should take away from Butler’s epic saga:

  1. The “show me the note” theory is not an acceptable defense in Minnesota state or federal court under Jackson and Stein.
  2. Listening to what a judge says (or what several judges say) is a good way to avoid sanctions.

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