E.D. Va. Imposes Fees and Costs under EFTA, Denies Sanctions

A Virginia Federal court (Moore v. Southtrust Corp., 392 F.Supp.2d 724 (E.D. Va. September 28, 2005)) has just published an opinion in which it ordered plaintiffs to pay defendant's attorney fees and costs pursuant to the fee-shifting provision of the Electronic Funds Transfer Act (EFTA), 15 U.S.C. 1693 et seq.:

[I]n the instant case, in order to determine if the defendant is entitled to reasonable attorney's fees and costs, the court must first determine if the plaintiff brought this suit in bad faith. As stated above, section 1693m(f) provides that “[o]n a finding by the court that an unsuccessful action under this section was brought in bad faith or for purposes of harassment, the court shall award to the defendant attorney's fees reasonable in relation to the work expended and costs.” 15 U.S.C. § 1693m(f) (2004).

. . .

[T]he plaintiff in the instant case . . . acted in bad faith in bringing the lawsuit against SouthTrust. As evidenced by the plaintiff's admissions in his deposition, the plaintiff filed suit even though he knew that either he or his wife had conducted the alleged unauthorized transactions, failed to investigate the charges before filing his claim, claimed that his card had been stolen when he knew that it had not, wrote a letter to the bank on fake law firm stationery rescinding some of the charges, claimed that the bank had violated the EFTA when, in fact, his own actions were fraudulent, and continued to litigate his claims long after he knew that his claims had no merit. These facts, which are substantiated by the plaintiff's own deposition, support the court's finding that he acted in bad faith in bringing this lawsuit against the defendant. Therefore, pursuant to section 1693m(f) of the EFTA, the court finds that the defendant is entitled to “attorney's fees reasonable in relation to the work expended and costs.” 15 U.S.C. § 1693m(f) (2004).

The court also denied a motion for Rule 11 sanctions against the plaintiff:

Although the defendant complied with the “safe harbor” provision of Rule 11, it served the letter and filed its motion for sanctions after this court had already entered its summary judgment order. Although the court does not deny that the plaintiff's conduct throughout this case has been egregious, a motion for sanctions filed at this point in the case does not meet the intended purpose of Rule 11 because the court has already ruled on the plaintiff's Complaint. Furthermore, even if the defendant had not failed to cross this procedural hurdle, the court would not be inclined to award monetary sanctions in this case because of the plaintiff's limited ability to pay and the large award of attorney's fees granted to the defendant. Any money paid by the plaintiff would be better spent in compensating the defendant for its attorney's fees and costs in defending this case, rather than satisfying sanctions. Furthermore, the court feels that the large award of attorney's fees and costs granted to the defendant is enough of a deterrence to keep the plaintiff from filing lawsuits in bad faith in the future.