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8th Circuit Court of appeals threatens Minneapolis lawyer with sanctions

Posted by: Randy Furst under Politics and government, Public records, Public safety Updated: July 15, 2013 - 11:54 AM

The Eighth Circuit Court of Appeals took the unusual step on Monday of threatening to impose its own sanctions on a Minneapolis foreclosure attorney for continuing to file appeals, using legal arguments that have been repeatedly rejected by the district court in Minnesota as well as the federal appeals court.

Attorney William B. Butler already faces possible discipline from the federal district court in Minnesota and the Minnesota Lawyers Professional Responsibility Board, both of which are currently conducting investigations of him. Butler's problems were described in the Star Tribune last Thursday.

It is the third time in five days that the appeals panel has upheld the dismissal of a Butler lawsuit. On Thursday and Friday it issued separate opinions, upholding dismissals of his suits by Minnesota District Court judges.

On Monday, a three-judge appeals court panel issued its latest ruling, upholding a decision by U.S. District Judge Patrick Schiltz, who dismissed a case filed by attorney Butler last August. The appeals panel called Butler's continued rehashing of arguments "troubling," citing three similar Minnesota cases in which his arguments were rejected.

"HIs deliberate attemp to ignore these cases suggests that he has the intention of deceiving or misleading the court into ruling in his favor," the panel said in Monday's decision. "At the very least, it suggests he lacks a nonfrivolous basis for appeal. Such conduct may provide a basis for this court to impose its own sanctions in the future."

The appeals court quoted liberally from Schiltz's harsh criticism of Butler for using the "show me the note argument" that the foreclosing entity no longer possesses the original foreclosure borrowing note, making the foreclosure invalid. In his August ruling, Schiltz imposed sanctions totalling $79,766. Butler has said he will not pay the sanctions by local federal judges, insisting his position is correct, the courts are wrong and he will eventually prevail. The sanctions now total $323,307, according to Star Tribune calculations.

In his latest ruling the appeals court quoted Schiltz, describing Butler's strategy:

"Butler takes a group of a dozen or so individuals who are facing foreclosure but otherwise have no connection to one another; he gins up a dozen or so claims against a dozen or so defendants grounded mostly on the show-me-the-note theory; and he fraudulently joins a single nondiverse defendant (typically a law firm that represented one of the lenders in a foreclosure proceedings) in an attempt to block removal to federal court.

"The defendants generally remove the cases to federal court, and Butler then moves to remand. If the judge denies Butler's motion, he might 'remand' the case himself by voluntarily dismissing it and refiling in state court within a day or two, thereby starting the process all over again. To hide his conduct, Butler will reorder the names of the plaintiffs or substitute a new plaintiff for one of the old plaintiffs, so that the refiled case will have a different caption.

"When Butler's claims are finally challenged on the merits, he makes false representations and spins out  contradictory and often absurd arguments in the hope that their sheer weight and number, multiplied by the number of parties and claims, will overwhelm his opponents and the court...." 

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