Kambis v. Considine , 290 Va. 460 ( 2015 )

PRESENT: All the Justices
MITCHELL KAMBIS, ET AL.
OPINION BY
v. Record No. 140983 JUSTICE CLEO E. POWELL
November 12, 2015
APRIL CONSIDINE, ET AL.
FROM THE CIRCUIT COURT OF ALBEMARLE COUNTY
Cheryl V. Higgins, Judge
Mitchell Kambis (“Kambis”), Elegant Homes of Virginia (“Elegant Homes”) and John
Rolfe Realty (collectively, the “Kambis parties”), appeal the decision of the trial court to award
sanctions to April Considine (“Considine”), Patricia Wolfe and Villa Deste, LLC (“Villa Deste”)
(collectively, the “Considine parties”). Finding no error, we will affirm the decision of the trial
court. 1
I. BACKGROUND
Kambis owns John Rolfe Realty and Elegant Homes of Virginia. From 1999-2011,
Kambis was in a romantic relationship with Considine. On October 25, 2000, Kambis and
Considine formed and were the sole members of Villa Deste. The purpose of Villa Deste was to
purchase and develop real estate for sale. At some point after October 25, 2000, Considine’s
mother, Patricia Wolfe, loaned money to Villa Deste for the purchase and development of real
estate and the construction of a home that Kambis and Considine later occupied. By 2006, Villa
Deste had acquired significant real estate holdings, including approximately 130 acres of
undeveloped land in Albemarle County.
On December 31, 2005, Kambis and Considine signed a document titled “Assignment of
Membership Interest” (the “Assignment”). Under the Assignment, Kambis transferred all of his
1
The Court has been advised that the appellant, Mitchell Kambis, died during the
pendency of this appeal. The appeal does not abate, however, and the Court will “retain
jurisdiction and enter judgment . . . as if such event had not occurred.” Code § 8.01-20.
interest in Villa Deste and its assets to Considine, for value received. Thereafter, Considine was
the sole owner of Villa Deste.
Sometime later, the romantic relationship between Kambis and Considine ended. On
October 13, 2009, the Kambis parties filed a complaint alleging seventeen claims against the
Considine parties. The Kambis parties also recorded a memorandum of lis pendens against the
properties owned by Villa Deste and the home owned by Considine. The Considine parties
demurred and filed a plea in bar asserting that the applicable statute of limitations had run on
certain claims. In response, the Kambis parties moved for and obtained leave to amend their
complaint. Although a first amended complaint was attached to their motion to amend, the
Kambis parties subsequently filed a second amended complaint.
In the second amended complaint, the Kambis parties alleged nineteen claims against the
Considine parties, including fraud, defamation, unjust enrichment, replevin, battery, enforcement
of a mechanic's lien, intentional infliction of emotional distress, and a number of derivative
claims. The Considine parties again demurred and filed a plea in bar. They also filed a motion
for sanctions pursuant to Code § 8.01-271.1 against the Kambis parties and their counsel,
arguing that the actions they undertook during the litigation were not warranted by existing law
and were taken to harass.
On October 18, 2012, after hearing argument on the demurrer and plea in bar, the trial
court dismissed fourteen of the nineteen claims with prejudice; a fifteenth claim was dismissed
without prejudice. Additionally, the trial court released the memorandum of lis pendens on the
properties. The order releasing the lis pendens was recorded by the clerk on December 12, 2012.
On March 5, 2013, the Kambis parties filed their third amended complaint, again raising
the claims that had not been dismissed previously, including claims for fraud, replevin, battery,
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intentional infliction of emotional distress, and unjust enrichment. The Considine parties filed a
counterclaim relating to the fraud claim. After further demurrers, special pleas in bar, and
motions for summary judgment were filed, the court subsequently dismissed the replevin claim.
Shortly before trial, counsel for the Kambis parties moved to withdraw from the case. On
September 11, 2013, after hearing argument on the matter, the trial court granted the motion to
withdraw. Seeking to avoid further delay while the Kambis parties sought new counsel, the
Considine parties moved for the trial court to grant a continuance only with regard to the claims
against the Considine parties, but to hear Kambis’ individual claims against Considine on the
original trial date, September 23, 2013. The trial court granted the motion, noting that Kambis’
individual actions were a significant cause of the delays that the parties had already experienced.
On September 20, 2013, three days prior to the scheduled trial on his individual claims,
Kambis, proceeding pro se, moved to nonsuit his individual claims (fraud, battery, and
intentional infliction of emotional distress) against Considine. On the morning of trial, the trial
court granted Kambis’ motion to nonsuit his battery and intentional infliction of emotional
distress claims. However, because Considine had filed a counterclaim related to Kambis’ fraud
claim, the trial court denied Kambis’ motion to nonsuit on that claim.
The trial court subsequently ruled against Kambis on an evidentiary matter and quashed
one of his subpoenas. Thereafter, Kambis commented that he was not capable of going forward
due to the complexity of the litigation and again asked for a continuance. The trial court denied
his request. After discussing the matter with an unaffiliated attorney who happened to be in the
courtroom at the time, Kambis moved to dismiss the fraud claim. The trial court granted the
motion but made no ruling as to whether the dismissal was with or without prejudice.
3
On January 15, 2014, the Kambis parties recorded a new memorandum of lis pendens
against the properties and the home. The Kambis parties then moved to vacate the trial court’s
October 18, 2012 order releasing the original memorandum of lis pendens.
On February 18, 2014, the trial court heard argument on the Kambis parties’ motion to
vacate the October 18, 2012 order releasing the original memorandum of lis pendens. At the
same hearing, the trial court heard argument on Considine’s motion for entry of an order
dismissing Kambis’ claims with prejudice. In response, Kambis sought to withdraw his motion
to dismiss the fraud claim against Considine, arguing that he never would have moved for
dismissal had he known it was with prejudice. After considering the parties’ arguments, the trial
court granted the Kambis parties’ motion to vacate the October 18, 2012 order releasing the
original memorandum lis pendens as well as Considine’s motion for entry of an order dismissing
Kambis’ fraud claim with prejudice.
On February 28, 2014, the trial court held a hearing on the Considine parties’ motion for
sanctions. The Considine parties sought attorney’s fees and costs in the amount of $137,819.61
from Kambis and his original counsel and $83,505.62 from Kambis alone.
On March 14, 2014, the Kambis parties moved to nonsuit their remaining claims against
the Considine parties. On March 24, 2014, the trial court granted the motion to nonsuit. It also
granted the Considine parties’ motion for sanctions. In determining the amount of sanctions, the
trial court explained that it looked at the number of claims, the type of claims, and whether the
Kambis parties’ behavior increased the cost and duration of the litigation in violation of Code §
8.01-271.1. The trial court attributed the costs related to the filing of an untimely appeal and an
improper derivative claim (neither of which is relevant to the present case) to the Kambis parties’
original counsel and awarded sanctions in the amount of $64,319.38 against the Kambis parties’
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original counsel. The trial court also found that there was “a certain level of intent to intimidate
Ms. Considine in this particular case” and that Kambis personally “was aware of the extent of the
litigation” based on an e-mail he sent to his original counsel. Accordingly, the trial court held
Kambis “responsible for the costs of the trial and going forward” and ordered him to pay
$84,541.61 in sanctions. The trial court then issued a final order striking the matter from the
docket.
Kambis appeals the award of sanctions.
II. ANALYSIS
On appeal, Kambis argues that the trial court’s award of sanctions was in error because
the award was not based on any of the reasons enumerated in Code § 8.01-271.1. According to
Kambis, the record demonstrates that his fraud claim was well grounded in law and fact, as it had
survived demurrers, special pleas in bar and a motion for summary judgment. He further asserts
that there was no finding that he brought the action or made a filing for an improper purpose
recognized under Code § 8.01-271.1. In making this argument, Kambis claims that there is a
distinction to be drawn between bringing an action or making a filing for the purpose of
intimidating the opposing party and bringing an action or making a filing for an improper
purpose.
“In reviewing a trial court’s decision to impose a sanction pursuant to Code § 8.01-271.1,
we apply an abuse of discretion standard.” Shebelskie v. Brown, 287 Va. 18, 26, 752 S.E.2d
877, 881 (2014).
In applying that standard, we use an objective standard of
reasonableness in determining whether a litigant and his attorney,
after reasonable inquiry, could have formed a reasonable belief that
the pleading was well grounded in fact, warranted by existing law
or a good faith argument for the extension, modification, or
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reversal of existing law, and not interposed for an improper
purpose.
Flippo v. CSC Assocs. III, L.L.C., 262 Va. 48, 65-66, 547 S.E.2d 216, 227 (2001).
The relevant portion of Code § 8.01-271.1 states:
The signature of an attorney or party constitutes a certificate by
him that (i) he has read the pleading, motion, or other paper, (ii) to
the best of his knowledge, information and belief, formed after
reasonable inquiry, it is well grounded in fact and is warranted by
existing law or a good faith argument for the extension,
modification, or reversal of existing law, and (iii) it is not
interposed for any improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of litigation.
Notably, the three enumerated bases for awarding sanctions under Code § 8.01-271.1 are
stated in the conjunctive. As such, an attorney or litigant’s “failure to comply with any one of
these statutory requirements invokes the sanctions provisions of the statute.” Williams &
Connolly, LLP v. People for the Ethical Treatment of Animals, Inc., 273 Va. 498, 510, 643
S.E.2d 136, 141 (2007).
Throughout his argument, Kambis implies that the award of sanctions was in error
because his pleadings were “well grounded in fact” and “warranted by existing law.” Indeed, we
agree that there is no indication in the record that the trial court awarded sanctions against
Kambis based on the viability of any claim, or the lack thereof. Rather, it is clear that the trial
court awarded the sanctions because it found that Kambis was using the present litigation for an
improper purpose. Accordingly, we need not consider whether the pleadings in the present case
were well grounded in fact or warranted by existing law. Instead, we focus on whether they
were interposed for an improper purpose.
Although Code § 8.01-271.1 only provides three examples of improper purposes (i.e., to
harass, to cause unnecessary delay or to needlessly increase the cost of litigation), we note that
these examples are prefaced with the phrase “such as.” Thus, it is readily apparent that this is by
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no means an exhaustive list. In determining whether a pleading is interposed for an improper
purpose, we are guided by the purpose of Code § 8.01-271.1 as well as various policy
considerations. This Court has recognized that one purpose of Code § 8.01-271.1 is to “reduc[e]
the volume of unnecessary litigation.” Oxenham v. Johnson, 241 Va. 281, 286, 402 S.E.2d 1, 3
(1991) (emphasis added). Additionally, “[t]he possibility of a sanction can protect litigants from
the mental anguish and expense of frivolous assertions of unfounded factual and legal claims and
against the assertions of valid claims for improper purposes.” Id. Similarly, “sanctions can be
used to protect courts against those who would abuse the judicial process.” Id.
Here, the trial court specifically found “a certain level of intent to intimidate Ms.
Considine in this particular case[] and that Mr. Kambis was aware of the extent of the litigation.”
In other words, the trial court found that Kambis was pursuing his claims in a manner that
demonstrated he was less interested in vindicating his legal rights and more interested in
intimidating and injuring Considine. It is readily apparent that a claim brought for such vengeful
and vindictive reasons is brought for an improper purpose under Code § 8.01-271.1. See
Northern Va. Real Estate, Inc. v. Martins, 283 Va. 86, 112-113, 720 S.E.2d 121, 134 (2012)
(determining that an action “filed out of a vindictive and malevolent desire to injure and
intimidate a business competitor” was brought for an improper purpose).
Further, we find ample evidence in the record to support the trial court’s ruling that
Kambis sought to use the present litigation to intimidate Considine. For example, the initial
complaint contained seventeen claims. Faced with a demurrer and a plea in bar, the Kambis
parties amended the complaint, adding two additional claims and modifying significant facts,
such as changing references to verbal contracts into written contracts. Then, after almost four
years of litigation and further amendments to the complaint, a majority of the claims were
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dismissed because they either failed to state a claim or were barred by the applicable statute of
limitations.2 Those claims that were not dismissed were eventually nonsuited or voluntarily
dismissed, but only after the Considine parties further expended a significant amount of time and
money in preparing for trial.
Additionally, we cannot overlook the fact that Kambis was aware of how much the
litigation was costing Considine. In the email that he sent his attorney on August 30, 2013,
Kambis estimated Considine’s expenses at over $250,000. The fact that Kambis’ attorney
withdrew from the case shortly thereafter due to Kambis’ inability to pay his own attorney’s fees
further demonstrates his awareness of the size and complexity of this litigation. Furthermore, we
note that, in the email, Kambis indicated that he is aware of his sanctionable actions, stating: “if
we do not prevail, then the Motion for Sanctions will go forward and have a realistic chance of
success for them.”
Finally, at oral argument, counsel for Kambis expressly confirmed the trial court’s
findings by admitting that there was an intent to intimidate Considine through the filing of the
pleadings. 3 Accordingly, we hold that the trial court did not abuse its discretion in awarding
sanctions. 4
2
Our reference to the dismissed claims does not include the derivative claim or the
improperly filed appeal, as the trial court expressly attributed these to the law firm that formerly
represented Kambis. However, it made no such attribution with regard to the other dismissed
claims.
3
We recognize that almost any legal action is, in some way, intimidating. Such
intimidation is inherent in our adversarial legal system and is generally not sanctionable, so long
as the intimidation is a collateral effect of a party’s legitimate attempt to vindicate a legal right.
The spectre of sanctions arises when intimidation is no longer a collateral effect. Thus, where a
party brings an action or makes a filing primarily to intimidate the opposing party, such an action
or filing is improper and runs afoul of Code § 8.01-271.1.
4
This Court also granted the Considine parties’ assignment of cross-error relating to the
trial court’s decision to vacate its order releasing the memorandum of lis pendens. However, in
light of the fact that this Court refused all of the Kambis parties’ assignments of error related to
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III. CONCLUSION
For the foregoing reasons, we will affirm the trial court’s award of sanctions.
Affirmed.
the encumbered properties, the Considine parties now argue that the issue is moot. Without
addressing whether there was any error on the part of the trial court, we agree that the issue is
moot.
We note, however, that the trial court did not order the release of the memorandum of lis
pendens in its final order, thereby necessitating the Considine parties to return to the trial court
and move for an order releasing the memorandum of lis pendens. Rather than require the
Considine parties to expend further time and money on this already unnecessarily extensive
litigation, and in the interests of judicial economy, as part of our affirmance of the trial court’s
award of sanctions, we will direct the Albemarle County Circuit Court Clerk to release the
applicable memorandum of lis pendens.
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