Submitted April 22, 2013.
Anil Goyal, Burr Ridge, IL, pro se.
George B. Collins, Attorney, Collins, Bargione & Vuckovich, Barry A. Gomberg, Gomberg & Associates, Chicago, IL, for Appellant Barry A. Gomberg.
Linda K. Horras, Attorney, Hinshaw & Culbertson, Chicago, IL, for Defendant.
Before WOOD, Chief Judge, and TINDER and HAMILTON, Circuit Judges.
On June 3, 2013, we issued an opinion affirming the district court's order quashing an attorney fee lien asserted by Barry A. Gomberg, a former attorney of Anil Goyal. Goyal v. Gas Technology Inst., 718 F.3d 713 (7th Cir.2013). Because we found that attorney Gomberg's arguments on appeal were frivolous, we ordered him to show cause why we should not impose sanctions under Federal Rule of Appellate Procedure 38. We also saw a possible violation of Rule 1.5 of the Rules of Professional Conduct and ordered Gomberg to show cause why we should not forward a
copy of the opinion to the Illinois Attorney Registration and Disciplinary Commission with a request that it determine whether his conduct warrants disciplinary action. Id. at 720-21. Gomberg has filed his response, Anil Goyal has responded, and Gomberg filed a reply.
After considering these submissions, we conclude that Rule 38 sanctions are justified in the amount of $7500 payable by Gomberg to Goyal and that a referral to the Commission is warranted. Gomberg's assertion of an attorney lien was entirely unjustified, his legal arguments in support of his payment demands were frivolous, and his explanations to this court for his conduct do not excuse it.
To summarize the details set forth in our earlier opinion, Goyal hired attorney Gomberg in late 2003 to represent him in mediating a dispute with his employer, Gas Technology Institute. Under the terms of their fee contract, Goyal paid Gomberg a non-refundable retainer of $2500, which would count toward a ten percent contingent fee for Gomberg " on all monies and items of value that we secure for you beyond what you have obtained from Gas Technology Institute to this date...." The retainer agreement did not contemplate litigation. Mediation sessions began. Two weeks after the first mediation session, Gomberg sent a letter to GTI's attorneys claiming an attorney lien in the amount of $70,000. Gomberg's response to the order to show cause provides no explanation or basis for his assertion of a lien in that amount at that time.
In March 2004, GTI made what it then called its final offer to settle with Goyal for $375,000. Goyal rejected the offer, and he and attorney Gomberg parted ways. On March 12, Gomberg sent Goyal a letter confirming the termination of the attorney-client relationship and asserting that Gomberg had filed an attorney's lien for his fee. In response, Goyal wrote that, since the mediation had not produced an agreement, the initial retainer of $2500 that he had already paid Gomberg was the only fee to which he was entitled.
More than a year after these events, Goyal filed suit against GTI. In April 2009, acting pro se, Goyal settled with GTI for approximately $1,300,000. Before all payments were made to Goyal under the settlement, Gomberg contacted GTI's lawyers, invoked his lien, and demanded payment of $34,022.52 in attorney fees from Goyal's settlement. (This amount included a demand for more than $4600 for Gomberg's efforts to collect on the lien. For details of the calculation, see 718 F.3d at 716 n. 2.) Goyal tried to stop GTI from paying Gomberg and sought help from the Chicago Bar Association to resolve the fee dispute. Gomberg refused to cooperate, though, and in January 2010 GTI wired Gomberg the requested amount. Gomberg held the amount in his client funds escrow until shortly after we issued our opinion on June 3, 2013. He reports that he then paid Goyal promptly, with interest.
Federal Rule of Appellate Procedure 38 authorizes a United States Court of Appeals to award damages and single or double costs to an appellee when an appeal is frivolous. The Rule has both a compensatory purpose and a deterrent purpose. E.g., Harris N.A. v. Hershey, 711 F.3d 794, 801 (7th Cir.2013); Ruderer v. Fines, 614 F.2d 1128, 1132 (7th Cir.1980). Rule 38 should not be invoked lightly, for reasonable lawyers and parties often disagree about the application of the law to a particular case. This court's doors are open to consider such reasonable disagreements ...