DEBORAH HOLGATE; ROBERT HOLGATE, Plaintiffs, and BARRY LEVINSON, Appellant, v. JOHN BALDWIN; COMMUNITY BANK OF NEVADA; HARD MONEY FUNDING; JOHN BALDWIN TRUST; LINDA M. NEWELL; MICHAEL J. NEWELL; MIKE NEWELL, Defendants-Appellees., 425 F.3d 671

Summary

The homeowners borrowed $ 640,000 from the bank to build their "dream home." When the costs of building their home ran over, they borrowed an additional $ 550,000 from the lender and the trust to finish the job. After the homeowners defaulted on this loan, the lender and trust foreclosed and completed the construction. The trust moved for sanctions under Rule 11 and the lender joined in the motion. The first attorney was allowed to withdraw based on a conflict of interest. After the dismissal of the action, the bank filed its motion for sanctions. The appellate court found that the motion for sanctions filed by the trust and the lender satisfied the "safe harbor" provision of Rule 11. The claim under 42 U.S.C.S. § 1985 was frivolous because there was no legal justification for their assertion of a protected class of consumers looking to build their dream home. However, the bank failed to satisfy the safe harbor provision of Rule 11 because by the time it move for sanctions, over five ...