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Healey v. Labgold

November 1, 2002

WILLIAM J. HEALEY, PLAINTIFF,
v.
MARC R. LABGOLD, DEFENDANT.



The opinion of the court was delivered by: John M. Facciola United States Magistrate Judge

MEMORANDUM OPINION

Introduction

In an earlier opinion I described how the relationship between two lawyers, William J. Healey and Marc Labgold, had degenerated from a warm friendship to bitter acrimony. The heart of the darkness is Healey's belief that Labgold, breaching Healey's confidence, disclosed to the members of a law firm with which both were then associated, that Healey was a homosexual. Healey's departure from that firm bred lawsuits, one in the United States District Court for the Eastern District of Virginia and one here. Initially, Healey proceeded pro se, but the lawsuit in this court ultimately settled promptly upon the arrival of Healey's present counsel. However, Labgold complains that Healey should have never filed the lawsuit in this court in the first place and demands that Healey reimburse him for the attorney's fees he has incurred. Labgold, for example, bitterly complains that Healey included as the first five counts of his complaint in this court the very same five counts that the Eastern District said he could not press because these counts belonged to Healey's bankrupt estate and could be pressed only by the trustee in bankruptcy.

The Chief Judge has referred this matter to me for a hearing and a report and recommendation on whether plaintiff's action against Labgold, now settled, should be dismissed with or without prejudice and whether Labgold is entitled to sanctions for Healey's bringing of this lawsuit in the first place.

In my initial decision I surveyed the sources of the court's authority to impose the sanctions Labgold seeks and concluded that a hearing was necessary under all of them to ascertain Healey's intent when he filed the lawsuit and prosecuted it as he did. I, therefore, held a hearing at which Healey testified.

This Decision

There are two *fn1 sources of authority to sanction Healey: the court's inherent authority, and its power, under 28 U.S.C.A. § 1927 (1994), to punish with sanctions an attorney who unreasonably and vexatiously multiplies the proceedings in a case. As I will explain, I have concluded that Healey violated this statute. There is, therefore, no reason to also consider whether the same conduct should be punished under the court's inherent authority.

I begin with specific findings of fact that are based on the testimony I heard and the exhibits either admitted at the hearing or attached to the various pleadings. I then set forth my conclusions of law and conclude with an explanation of why I have reached that conclusion.

FINDINGS OF FACT

1. In May of 1995, William J. Healey was hired by Oblon, Spivak, McClelland, Maier & Newstandt, P.C. ("Oblon Spivak") as an associate. He was fired on May 5, 1998.

2. On September 25, 1998, Healey filed a petition for bankruptcy in the United States Bankruptcy Court for the Eastern District of Virginia.

3. On January 7, 1999, Healey received a discharge from the bankruptcy court.

4. On January 14, 1999, the bankruptcy trustee filed a report of no distribution, and an order was entered closing the case.

5. On January 26, 1999, Healey filed a complaint in the United States District Court for the Eastern District of Virginia against Oblon Spivak, Norman F. Oblon, Marvin J. Spivak, C. Irvin McClelland, Gregory J. Maier, Arthur I. Neustadt and Marc R. Labgold ("Labgold").

6. The complaint contained 7 counts:

Count 1: Wrongful Discharge

Count 2: Breach of Contract

Count 3: Breach of Fiduciary Duty

Count 4: Tortious Interference with a Contract

Count 5: Interference with a Business Relationship

Count 6: Defamation

Count 7: Intentional Infliction of Emotional Distress

7. On August 16, 1999, the law firm and Labgold moved to dismiss the complaint on the grounds that Healey's bankruptcy filing should have included in its schedules the claims Healey was pressing against them. Before that motion was ruled upon, Healey filed an amended complaint that, inter alia, withdrew the claim for intentional infliction of emotional distress, but added a claim for violation of a Virginia Code provision that, according to Healey, barred any conspiracy to injure an individual professionally by firing him and then advising others that he had been fired for cause.

8. On August 25, 1999, Healey filed a motion in the Bankruptcy Court to reopen his case for the purpose of listing and exempting his interest in the lawsuit he had filed. He also moved to dismiss count seven of his complaint, ...


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