Opposition Brief — Dubin v. Bank of Hawaii

Sapreme Court, U.S. |

| FILED

ea | |

No. 01-1666 JUN 1% 2002

citar densainas 2B

Jn The

Supreme Court of the Anited States

*

GARY VICTOR DUBIN and GREGG YOUNG,

Petitioners,

vs.

BANK OF HAWAII and JOHN CANDON,

Respondents.

¢

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

¢

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

¢

KATHERINE GRACE LEONARD

CARLSMITH BALL LLP

Counsel of Record

NENAD KREK

CARLSMITH BALL LLP

Pacific Tower, Suite 2200

1001 Bishop Street

Honolulu, Hawaii 96813

(808) 523-2500

Counsel for Respondent

Bank Of Hawaii

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

sm,

Od 4 Pee

QUESTION PRESENTED FOR REVIEW

Motwithstanding the lengthy list of questions set forth

in the Petition For Writ Of Certiorari, the Respondent

believes that the Petition, at best, raises a single question:

Whether, under the particular facts of this case, the

District Court abused its discretion in awarding and

determining the amount of sanctions against the Petition-

ers pursuant to Fed. R. Civ. P. 11, arising from their filing

of a frivolous complaint.

ii

DISCLOSURE UNDER SUP.CT.R. 29.6

Respondent Bank of Hawaii is a Hawaii banking

corporation with its principal place of business located in

Honolulu, Hawaii. Bank of Hawaii’s parent corporation is

Bank of Hawaii Corporation, which owns all (or nearly all)

of Bank of Hawaii’s stock. No one other than Bank of

Hawaii Corporation owns 10% or more of Bank of Hawaii’s

stock.

TABLE OF CONTENTS

Page

QUESTION PRESENTED FOR REVIEW. ................ i

DISCLOSURE UNDER SUP.CT.R. 29.6 ................06. ii

EE TEI REET EAD snachtncinsccscsncinccecesniesacssstesonsecs iii

OE ED tnenieccnccntccovsanssensentecnsadncne v

I. COUNTERSTATEMENT OF THE CASE. ....... 1

A. The Underlying State Court Action.......... 1

B. The Award of SanctionB.....................000000 3

1. The Petitioners never withdrew the

Offending Complaint......................006 3

2. The proceedings to determine the

amount of sanctions ..................sceeesees 4

C. The Petitioners’ Claims of Error by the

DE RISETOES FOEDD o.0.00s0cccecccccescresscscssccseece 6

1. Award of all fees incurred since the

filing of the Offending Complaint....... 6

2. The Petitioners’ ability to pay sanc-

| RAI een IRE SER ee ae ee ee 7

3. In camera inspection of the unre-

dacted billing records.....................00+ 7

4. Determinations made on the basis of

the unseen billing entries................... 8

5. Award of fees for work on issues other

than the lack of standing ................... 9

6. Award of fees for procedural work in

pursuit of sanctions....................eseeeees 9

aii ai

iv

TABLE OF CONTENTS -— Continued

Page

7. The transcript and exhibits of “Rule

Be wiiiihisndckndinnaisiiintiedemenabnins 9

8. Determinations made on the basis of

the unseen billing entries................... 10

D. The Recusal Motions ...10..cccesccscscossscccccsecess 10

II. PETITIONERS DO NOT RAISE AN ISSUE

OF LAW DESERVING REVIEW..................... 11

A. Kunimoto’s Lack of Standing to Bring the

Offending Complaint.................ccssscssseees 11

B. Evidentiary Support of the Award of

IEEE RT ALERT AE ERIE 12

C. Judge Ezra’s Refusal to Recuse Himself... 13

EA, RD Be “RR ON sacicctiintstencscvcascscscsaes 13

E. The Extent to Which the Bank Was Enti-

tled to Pursue Dismissal and Sanctions.. 14

F. The Alleged “Block billing”....................... 14

G. The In Camera Review of the Bank’s

Counsel’s Billing Records ......................+. 15

i EE eitittiictsintintcatcninirinarcaiennses 15

I. The Petitioners’ Ability To Pay................. 16 :

J. The Refusal of Circuit Judge O’Scannlain

to Recuse Himself................cccccccsesceeseceeees 16

TER, COIR hithisiinncansintsoneiansnennthaabivncbanionanns 17

Vv

TABLE OF AUTHORITIES

Page

CASES

District of Columbia Court of Appeals v. Feldman,

460 U.S. 482, 103 S.Ct. 1303, 75 L.Ed.2d 206

SEMI ssscisotchsnis tsi ddeedetinesndia asaaasadadah dcadeagatedaneanias aemainibhagioaasianonaiodic 12

Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct.

i ee ae ee CD wichbiecacetesaektcssdtncntninsetineiianncines 12

STATUTES AND RULES

I Oe ihe ntact apadaniacsinicines 1, 8, 6, 18, 17

SO i tne dalam nilgaeel 3

PT A Be ee ici einenscnnisintdadcriitstaniomasiaiinnsvants 9, 10, 15, 16

1

I. COUNTERSTATEMENT OF THE CASE

As the Court of Appeals stated in its decision, which

the Petitioners would have this Court review, the main

issue in this case is “whether the district court judge

abused his discretion in either the awarding of or the

amount of Rule 11 sanctions” against Petitioners for

having filed and maintained a frivolous complaint on

behalf of their clients (the “Offending Complaint”). Joint

Petition For Writ Of Certiorari (“Pet.Cert.”), Appendix

(“Appx.”) 21, at A92. The Petitioners also contend that the

District Court judge and one of the appellate judges

improperly failed to recuse themselves. Id. (All references

in this brief are to the Pet.Cert.), at 9-12. However, the

Petitioners do not raise any new or unsettled issues of law.

Instead, the Petition argues facts unsupported by the

record and insinuates a vast conspiracy of state and

federal judges, lawyers, and financial institutions against

the Petitioners. The Petition is as frivolous as the Offend-

ing Complaint that led to the award of sanctions against

the Petitioners in the first place.

A. The Underlying State Court Action

The Petitioners’ description of the “underlying lender

liability dispute,” id. at 2-4, is improper and without

support in the record. The record shows that the Respon-

dent Bank of Hawaii (the “Bank”) had sued one Dr. Kuni-

moto (“Kunimoto”) in a Hawaii State Court to collect

certain loans (the “State Action”). Id., Appx. at A12, Al5-

Al7 (GJ 1 and 11-19 of the Complaint subsequently filed

by the Petitioners on behalf of Kunimoto in the United

States District Court for the District of Hawaii) (the

Offending Complaint). In State Action, Kunimoto asserted

various “lender liability” counterclaims, which were

2

rejected and a judgment was eventually entered against

Kunimoto for the amount due and owing to the Bank, and

also in favor of the Bank and against Kunimoto and other

defendants on the Bank’s claims alleging fraudulent

transfers by Kunimoto. Id. at A21-A22 (J 39 and 41 of the

Offending Complaint) and Appx. 9 (Order dismissing the

Offending Complaint) at A33.

The Petitioners’ contentions that the State Court

judge was biased and should have been disqualified, id. at

3, are improper and malicious. The judgment against

Kunimoto in the State Action is not on review before this

Court. The refusal of the State Court judge to recuse

herself likewise is not before this Court. The Petitioners

cannot be allowed now to collaterally attack the final

judgment, or any of the rulings made in the State Action.

The record further reflects that Kunimoto declared

bankruptcy in the middle of the State Court trial, .nd that

the Bankruptcy Court appointed a Trustee for Kunimoto’s

bankruptcy estate. Id., A22-A23 (| 42-43 of the Federal

Complaint). The Petitioners imply that the Trustee (Can-

don) improperly declined to do what the Petitioners

wanted him to do, i.e., to relitigate the State Court action

in the United States District Court. Id. at 4. However, the

conduct of the Trustee is not before this Court. The Peti-

tioners had ample opportunity to challenge the Trustee’s

conduct before the Bankruptcy Court. The Petitioners do

not claim that any successful challenge was made, and a

collateral attack by insinuation should not be counte-

nanced by this Court.

The Petitioners correctly state that when they filed

the offending Complaint on behalf of Kunimoto and his

wife in the United States District Court, it was dismissed

=< a

3

for lack of standing. Id. at 4. The District Court also found

that filing of the Offending Complaint was an improper

attempt to relitigate the isszes decided in the State Court

action. Jd. at A64. Sanctions against the Petitioners were

awarded under Fed. R. Civ. P. 11 for having filed the

Offending Compiaint. Jd. at A62-69, A184. The Court of

Appeals affirmed the award and the amount of sanctions.

Id. at A192-A198.

B. The Award of Sanctions

1. The Petitioners never withdrew the Of-

fending Complaint

The Petitioners contend that they had offered to

dismiss the Offending Complaint without prejudice, and

that therefore they were immune from sanctions for a

frivolous filing pursuant to Fed. R. Civ. P. 11(c)(1)(A). Id. at

5-6. However, the District Court found that the Petitioners

made only a conditional offer to dismiss the offending

Complaint without prejudice oniy if the Bank agreed to

dismiss its nondischargeahility complaint against Kuni-

moto in the bankruptcy proceedings, and that the Peti-

tioners never circulated a dismissal stipulation or moved

for a voluntary dismissal under Fed. R. Civ. P. 41(a)(2). Id.

at A67.

Therefore, this is not a case where the record would

support a resolution by this Court of the question of law

_whether an actual voluntary dismissal without prejudice

can suffice to bring the pleader within the “safe harbor” of

Fed. R. Civ. P. 11. The Offending Complaint was never

withdrawn, and the District Court found that the Petition-

ers’ conditional offer to withdraw the Offending Complaint

Se ee a eee

4

in return for the Bank’s dropping of the nondischargeabil-

ity complaint was “a negotiating tactic designed to main-

tain leverage against the [Petitioners] in order to achieve a

settlement.” Id. at A67.

The Court of Appeals agreed with the District Court,

noting that the Petitioners’ “alleged offers were not sincere

proposals but rather disingenuous attempts to force

settlement.” Jd. at A196. Accordingly, on this record there

is no generally applicable question of law for this Court to

decide, but merely a question of whether the District

Court had properly exercised its discretion upon the

specific facts of this case.

2. The proceedings to determine the amount

of sanctions

The Petitioners complain of an allegedly “highly

abbreviated” hearing in which they had “little time” to

object to the Bank’s request for attorneys’ fees and costs.

Id. at 7. This is a gross misrepresentation of the record.

The proceedings for assessment of the amount of sanctions

lasted from December 7, 1998 until January 18, 2000, i.e.,

more than one full year. Jd. at A62-A69 and A184. The

Petitioners were given ample opportunity to brief their

position on the issues of the award and the amount of

sanctions, and they filed numerous memoranda and

motions opposing various aspects of the sanctions. Id.

Appx. 17 (Report of Special Master) at A162 (referencing

[Petitioners’] Joint Notice of Objections filed July 14, 1999,

and [Petitioner] Gregg Young’s Memorandum In Opposi- |

tion To The Fees Requested by [Respondent] Bank Of |

Hawaii and John Candon filed August 28, 1999), A163

5

(referencing the Petitioners’ repeated motions to recon-

sider and extend time for their opposition to the fee

requests), A164-A165 (referencing further papers filed by

the Petitioners).

The Magistrate Judge devoted two hearings, for a

total of four hours, to the amount of sanctions, and di-

rected all parties to submit 15-page post-hearing memo-

randa. Id., Appx. 17 at Al64. The Magistrate Judge then

issued a long report addressing the claims for fees and

costs and the Petitioners’ objections in great and excruciat-

ing detail. JId., Appx. 17 at A158-A183. The Petitioners

further pursued their objections to the Magistrate Judge

and his report with the District Judge. Id. at A184 (refer-

ring to some of the Petitioners’ objections). It is no wonder

that the Court Appeals found that “[iJn fact, the appoint-

ment of a special master and the evidentiary hearings

comprised more process than what was required.” Id.,

Appx. 21 at A197.

In sum, the record shows the Petitioners had briefed

their objections to the award and amount of sanctions at

great and painful length, and that substantial evidentiary

hearings on the amount of sanctions were held. The

Petitioners’ contentions regarding the alleged general

unfairness of the proceeding, such as their claim that the

Magistrate Judge who was designated as a special master

was being considered for reappointment at the time and

therefore his independence from the influence of the

District Judge was questionable, id. at 7, are plainly

contrived.

C. The Petitioners’ Claims of Error by the

Magistrate Judge

The Petitioners identify eight specific alleged errors

by the Magistrate Judge, each of which they claim

amounted to a disregard of the law and fairness. Jd. at 7-9.

As discussed below, the Petitioners’ assignments of error

misrepresent the record and argue facts.

1. Award of all fees incurred since the fil-

ing of the Offending Complaint

The Petitioners contend that the Magistrate Judge

improperly prohibited them from briefing “the relevant

legal issues as to the permissible amount of Rule 11

sanctions awardable.” Jd. at 7. This is not true, because

the Magistrate Judge invited and considered voluminous

memoranda submitted by the Petitioners regarding the

amount of sanctions. Jd., Appx. 17 at A162-A165. See

discussion in subsection I.B.2 above. However, the Magis-

trate Judge declined to entertain the Petitioners’ argu-

ment that the Bank of Hawaii should only be awarded

that part of its attorneys’ fees incurred in connection with

presenting the defense of the lack of standing, because

that issue had already been argued before Judge Ezra,

who ruled that the Bank of Hawaii was entitled to recover

all fees “for the entire action” commenced by the filing of

the Offending Complaint, i.e., including the fees incurred

in the proceedings to determine the sanctions. Jd. at A162.

Judge Ezra’s ruling was based on Fed. R. Civ. P. 11

and the controlling precedent, and was affirmed as such by

the Court of Appeals. Jd., Appx. 21 at A197. The fact that

the Petitioners do not agree with the interpretation of

Rule 11 by the Court of Appeals and its application by the

eee ener a me

District Court does not mean that the District Court and

the Magistrate Judge acted in disregard of the law or

unfairly to the Petitioners. To the contrary, the record

shows that the District Judge and the Magistrate Judge

followed the precedent binding upon them.

2. The Petitioners’ ability to pay sanctions

The Petitioners contend that the Magistrate Judge

refused and failed to consider their evidence of inability to

pay any sanctions. Jd. at 7. However, the Magistrate Judge

found that the Petitioners provided no information regard-

ing their assets, and that therefore they failed to introduce

evidence probative of their ability to pay sanctions. Zd.,

Appx. 17 at A169. The Court of Appeals agreed with the

Magistrate Judge. Id., Appx. 21 at A197. The record shows

that the Magistrate Judge did not disregard the law, but

instead that the Petitioners’ litigation tactics backfired on

them.

3. In camera inspection of the unredacted

billing records

The Petitioners contend that the Magistrate Judge

refused to allow them to obtain and review unredacted

billing records of the Bank’s counsel. Jd. at 7-8. However,

as the Magistrate Judge noted in his Report, it was Peti-

tioner Dubin who first suggested that the Magistrate

Dubin conduct an in camera review of those billing records

te determine whether the redacted parts evidence any

“dishonesty” by the Bank’s counsel that was alleged by

Dubin. Jd., Appx. 17 at A1l64-A165. No dishonesty of any

sort was found, and the Petitioners cannot be heard now to

complain that the Magistrate Judge did what they had

asked him to do.

In any event, the Magistrate Judge found that the

vast majority of the redacted items from counsel’s invoices

was for work unrelated to this case, and therefore the

redactions were proper and necessary. Jd. at A180-A181.

Clearly, the Bank would not and did not ask the Court to

award fees that the counsel charged for working on other

Bank matters, but which were billed in the same invoice,

as a part of sanctions against the Petitioners. Likewise,

the Petitioners had no conceivable right to see the Bank’s

counsel’s billings in unrelated matters. The record shows

no disregard of the law or any unfairness by the Magis-

trate Judge, but instead shows that he found facts and

_reached conclusions the Petitioners did not like.

4. Determinations made on the basis of

the unseen billing entries

The Petitioners claim that the Magistrate Judge

based his determination of the appropriate amount of fees

awardable to the Bank upon the billing entries by the

Bank’s counsel that were redacted before their production

and which the Petitioners were never allowed to see. Jd. at

8. However, the Magistrate Judge found that “a vast

majority” of the redacted items was properly excluded

because those billings were unrelated to this case. Id.,

Appx. 17, at A181. As to the remaining redacted items, an

issue of apportionment arose in those instances where

there was only total time noted for the performance of the

tasks for which an award was sought and for those that

_were redacted and no award was sought. Jd. at A180. The

Magistrate Judge stated that he followed the rule that

9

“Where the documentation of the hours is inadequate, or

where the hours expended were unnecessary or excessive,

the appropriate remedy for this Court is to eliminate or

reduce the hours expended,” and that where he could not

reasonably apportion the time, he reduced the award

accordingly. Jd. at A180-A182. In doing so, the Magistrate

Judge plainly did not disregard of the law or act unfairly,

but exercised judicial discretion.

5. Award of fees for work on issues other

than the lack of standing

This is a part of the same argument discussed in

subsection I.C.1 above.

6. Award of fees for procedural work in

pursuit of sanctions

This is yet another part of the same argument dis-

cussed in subsection I.C.1 above.

7. The transcript and exhibits of “Rule 53

hearings”

The Petitioners claim that the Magistrate Judge did

not file a transcript of the hearings that he conducted or

the exhibits introduced at the hearings as required by Fed.

R. Civ. P. 53. Id. at 9. This is a red herring. Fed. R. Civ. P.

53(f) provides that a Magistrate Judge is subject to the

procedural requirements of Rule 53 only if the order

referring the matter to the Magistrate Judge expressly

provides that the reference is made under Rule 53. In this

instance, the order referring the matter to the Magistrate

Judge did not invoke Rule 53. IJd., Appx. 11 at A68-A69.

10

Therefore, Rule 53 never applied to these hearings. In any

event, the Petitioners had ample opportunity to obtain and

designate the transcript of the hearings before the Magis-

trate Judge as a part of the record before the District

Court and on appeal, but they instead chose to complain.

In sum, the Petitioners’ arguments are pointless and moot.

8. Determinations made on the basis of

the unseen billing entries

This is a rehash of the arguments discussed in subsec-

tions I.C.3 and I.C.4 above.

D. The Recusal Motions

The Petitioners argue that District Judge Ezra and

Circuit Judge O’Scannlain improperly failed to recuse

themselves in this case. This argument must be taken in

the context of the Petitioners’ other contentions that (1)

the State Court judge in the underlying case was biased

because the Bank allegedly gave her a sweetheart mort-

gage, id. at 3; (2) the Magistrate Judge in Rule 53 proceed-

ing was under consideration for retention and therefore

was under particular influence of Judge Ezra, id. at 7; (3)

District Judge Real “hand-picked” Petitioner Gary Victor

Dubin’s (“Dubin”) tax evasion case and improperly had

him convicted and incarcerated, id. at 11; (4) Circuit Judge

Poole was senile, id. at 11; and (5) District Judge Ezra was

“badmouthing” Dubin to the Chief Circuit Judge Wallace,

id. at 11 and A187-A188. Of course, these contentions have

no support in the record.

The Petitioners’ consistent litigation tactics are to

claim that each and every judge, state or federal, trial or

appellate, who does not act to their liking, is biased

a a

11

against them and should be recused or disqualified. The

Petitioners’ habit of personally attacking every judge in

sight, and the opposing parties and counsel as well, is

revolting. Jd. at A18-A19 (allegations that the Bank and

its counsel improperly “permeate every institution and

aspect of governance” in the State of Hawaii), A21-A22

(allegat>-ns that the Bank bribed the State judge in the

underlying State Action). The Petitioners’ recusal argu-

ments are frivolous on their face.

II. PETITIONERS DO NOT RAISE AN ISSUE OF

LAW DESERVING REVIEW

The issues on which the Petitioners seek*review here

argue facts, involve legal points that are well settled

within our Circuit and as to which there is no conflict with

decisions of other Courts of Appeals, or are plainly con-

trived. None of those “issues” deserve further review.

A. Kunimoto’s Lack of Standing to Bring the

Offending Complaint

The Petitioners argue that Kunimoto’s lack of stand-

ing to bring a suit on behalf of his bankruptcy estate

without the Trustee’s consent was debatable. Jd. at 14-16.

The Court of Appeals disagreed and held that the law was

settled, and that the Petitioners’ claim of Kunimoto’s

standing was not “colorable.” Jd., Appx. 21 at A193-A195.

The Petitioners have failed to demonstrate that this ruling

conflicts with any ruling by any other Court of Appeals.

In any event, this case is a singularly inappropriate

vehicle for this Court to undertake a review of debtor’s

standing to bring suits on behalf of his bankruptcy estate.

12 ‘

It is clear, and two Courts have so found, that the Peti-

tioners were engaged in an improper effort to have a

judgment of the Hawaii State Court reviewed and reliti-

gated in the United States District Court for the District of

Hawaii. Thus the District Court wrote that “most of

Plaintiffs’ claims re-allege issues which have already been

adjudicated by the state court in Defendants’ favor and are

therefore barred by the doctrines of res judicata and

collateral estoppel,” Jd., Appx. 11 at A64, and the Court of

Appeals wrote that “The complaints largely repeated

claims that had been settle« in state court.” Id., Appx. 21

at A196. Therefore, in addition to the lack of standing, the

Offending Complaint is also barred by the doctrines of res

judicata and collateral estoppel, as well as by the doctrine

of Rooker v. Fidelity Trust Co., 263 U.S. 413, 415-16, 44

S.Ct. 149, 68 L.Ed. 362 (1923) and District of Columbia

Court of Appeals v. Feldman, 460 U.S. 462, 482, 103 S.Ct.

1303, 75 L.Ed.2d 206 (1983) (precluding federal court

jurisdiction where claims are inextricably intertwined

with a state court decision in a particular case).

B. Evidentiary Support of the Award of Sanc-

tions

The Petitioners argue that District Judge Ezra im-

properly based his decision to award sanctions on their

alleged misconduct unrelated to this case. Jd. at 16-17.

This is a baseless insinuation. The gratuitous but well-

intended remarks by Judge Ezra suggesting to Petitioner

Dubin to reconsider his general approach to litigation, to

which the Petitioners refer, are not material to the award

of sanctions. The record amply supports the award of

sanctions for the Petitioners’ conduct in this action, which

two Courts found was intended to harass the Bank and

13

relitigate claims decided in the State Court. Id., Appx. 11

at A64 (“filed for the improper purpose of harassing and

pressuring Defendants to settle other pending litigation”),

Id., Appx. 21 at A196 (“a strategy of harassment”). See also

discussion in subsection II.A above.

C. Judge Ezra’s Refusal to Recuse Himself

The Petitioners argue that Judge Ezra should have

recused himself because Petitioner Dubin had once raised

a malpractice claim against Ezra, who was then in private

practice, and his firm. Jd. at 18-19. The Court of Appeals

characterized the Petitioners’ motions to disqualify Judge

Ezra and the Magistrate Judge as a part and parcel of the

Petitioners’ “strategy of harassment.” Id., Appx. 21 at

A196. This Court certainly should not countenance such a

strategy, and no District Judge should be put in a position

where he could be bullied into recusal by abusive litigants.

D. Rule 11 “Safe Harbor”

The Petitioners argue that this Court should hold that

a dismissal without prejudice of a baseless pleading should

immunize one from sanctions under the current language

of Fed. R. Civ. P. 11. As previously discussed, this is not an

appropriate case to decide this question, because the

Petitioners never withdrew the Offending Complaint and

only made a conditional offer to dismiss it without preju-

dice if the Bank made other concessions. See discussion in

subsection I.B.1 above.

14

E. The Extent to Which the Bank Was Entitled

to Pursue Dismissal and Sanctions

The Petitioners argue that this Court should hold that

the Bank and its counsel should have spent less effort in

pursuing the dismissal of the Offending Complaint and an

award of sanctions against the Petitioners. Jd. at 23-24. In

effect, the Petitioners ask this Court to engage in a de-

tailed factfinding to determine whether the Bank at any

point exceeded some hypothetical absolute minimum of

effort sufficient to counter harassment and unfair litiga-

tion tactics employed by the Petitioners at each stage of

the proceedings in this action.

It is disingenuous for the Petitioners to complain

about the amount of fees incurred by the Bank in prose-

cuting its request for sanctions. It was the Petitioners’ own

choice to mount a scorched earth defense to the request for

sanctions, including repeated motions for reconsideration

of almost every order entered, and for disqualification of

the District Judge and the Magistrate Judge. Id., Appx. 21

at Al96. Likewise, it was the Petitioners’ own choice to

fight the request for sanctions for their frivolous conduct

by asserting increasingly frivolous defenses for more than

one full year. In sum, the Petitioners fail to raise an issue

of law deserving of review.

F. The Alleged “Block Billing”

The Petitioners argue that the fees were improperly

awarded for “block billed” entries in the Bank’s counsel’s

invoices. Id. at 24-25. This argument fails to raise a legal

issue, because the Court of Appeals expressly found that

the Magistrate Judge had conducted a line-by-line review

of the time records and reduced time entries wherever

15

there was any doubt as to how time should have been

apportioned between different tasks. Jd., Appx. 21 at A197.

See also discussion in subsections LC.3 and L.C.4 above.

Apparently the Petitioners expect this Court to repeat the

line-by-line review to verify that the Magistrate Judge

actually did what the Court of Appeals said he did.

G. The In Camera Review of the Bank’s Coun-

sel’s Billing Records

The Petitioners argue that the Magistrate Judge had

improperly reviewed the unredacted billing records by the

Bank of Hawaii’s counsel in camera. Id. at 25-26. As

discussed in subsections I.C.3 and I.C.4 above, the in

camera review was initially requested by the Petitioners,

so that the Magistrate Judge can verify that there was no

dishonesty involved in redacting of these records. Then, as

discussed in subsection II.F above, the Magistrate Judge

conducted a line-by-line review of the redacted and unre-

dacted time records and reduced time entries wherever

there was any doubt as to how time should have been

apportioned between different tasks. Therefore, no legal

issue arises as to the appropriateness of the Magistrate

Judge’s actions. The Petitioners disagree with the Magis-

trate Judge’s findings and conclusions, but those clearly

were within his discretion.

H. The Rule 53 “Issue”

The Petitioners argue that this Court should hold that

the Magistrate Judge violated the procedural require-

ments of Fed. R. Civ. P. 53. Id. at 26. However, as dis-

cussed in subsection I.C.7 above, the Magistrate Judge

was not subject to the Rule 53 requirements, and in any

16

event the Petitioners had ample opportunity to obtain

transcripts of the hearings. The Petitioners’ arguments

regarding Rule 53 are moot.

I. The Petitioners’ Ability to Pay

The Petitioners argue that this Court should hold that

the Magistrate Judge, in assessing the amount of sanc-

tions, improperly failed to consider their ability to pay. Id.

at 26-29. However, as discussed in subsection I.C.2 above,

the Magistrate Judge found that the Petitioners failed to

provide any evidence regarding their assets. Therefore,

there is no legal issue before this Court regarding the

Petitioners’ ability to pay sanctions. Clearly the Magis-

trate Judge could not review the evidence which the

Petitioners chose not to introduce.

J. The Refusal of Circuit Judge O’Scannlain to

Recuse Himself

The Petitioners argue that Circuit Judge O’Scannlain

should have recused himself because he sat on a panel

that affirmed Petitioner Dubin’s criminal conviction for

tax evasion. Jd. at 29-30. As discussed in subsection I.D,

the Petitioners’ incessant motions for recusal and disquali-

fication of all judges in their sight constitute a singular

“signature” of their abusive litigation style. This is a

patently contrived claim and the same comments as set

forth in subsection II.C, regarding District Judge Ezra’s

refusal to recuse himself, apply here.

17

Ill. CONCLUSION

It is difficult to find a case where sanctions against

abusive litigation tactics were more compellingly neces-

sary than here. The Petitioners’ filing of the Offending

Complaint, which attempted to reopen and relitigate a

case decided in the State Court, was plainly frivolous and

cried for sanctions. In the process of fighting sanctions, the

Petitioners continued their abusive and harassing conduct

by, among other things, filing motions to recuse judges,

filing repeated motions to reconsider, and generally trying

to outlast the Bank in a grand battle of attrition. The

Petitioners lost their battle, and have only themselves to

blame for the consequences and the ultimate cost.

The Petition does not raise a single issue of law that

would deserve this Court's attention. It is replete with

disturbing personal attacks against the Bank, its counsel

and all judges involved in these and related, and some

unrelated, proceedings. At best, the Petition asks this

Court to review de novo the Magistrate Judge’s factual

determinations which he made as a Master to whom a

District Judge referred the matter of assessing the amount

of Rule 11 sanctions against the Petitioners. At worst, the

Petition is another instance of malicious nonsense

spawned by the Petitioners in their efforts to win their

case by abusing the legal system. There is no conceivable

reason why this Court should waste its time with this

Petition and with these Petitioners, who have already

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wasted an inordinate amount of time of a number of

Courts below. The Petition should be denied.

Respectfully submitted,

KATHERINE GRACE LEONARD

CARLSMITH BALL LLP

Counsel of Record

NENAD KREK

CARLSMITH BALL LLP

Pacific Tower, Suite 2200

1001 Bishop Street

Honolulu, Hawaii 96813

(808) 523-2500

Counsel for Respondent

Bank Of Hawaii