Federal court stands firm on more than $34K in sanctions against Wisconsin lawyer

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The Seventh Circuit Court of Appeals isn’t backing down on its decision to sanction a Platteville lawyer for filing a case in a state court in Arkansas rather than in federal court.

In June, a three-judge panel of the Wisconsin state court of appeals had imposed more than $34,000 in sanctions against the trial lawyer Christopher Stombaugh for his initially filing a lawsuit in Arkansas state court instead of a Seventh Circuit federal court. The suit itself was not frivolous, according to the panel.

However, Stombaugh’s actions were “objectively unreasonable” and “vexatiously” multiplied the proceedings, warranting sanctions under federal law. Arkansas state court, according to the panel, had nothing to do with the case.

Stombaugh fought the sanctions, making a motion for rehearing later in June. Among other things, he contended that, under federal law, he could not be sanctioned for filing a case in a court outside the Seventh Circuit’s jurisdiction. He also argued that there had been no evidentiary hearing in the matter.

However, a three-judge panel disagreed with Stombaugh on Tuesday, granting a rehearing only to clarify in its June opinion that the court has also the inherent authority to impose sanctions for both abuses of the judicial process and the use of inappropriate litigation strategies.

“There is no dispute as to what Stombaugh did; the only question is whether he should be sanctioned for it, and that question has been thoroughly litigated,” according to the court’s opinion Tuesday.

Stombaugh said Wednesday that he and his firm, Smith Stombaugh & Co., were surprised and disappointed by the decision, especially after learning of the court’s additional reasoning.

“Our case was simply filed where the defendant conducted its business, which we honestly believed was in the best interests of our clients,” Stombaugh said. “We are carefully considering review.”

Stombaugh’s clients in the case are a group of property owners whose homes, in Bagley, were flooded in July 2007 when a ditch under a railway bridge got clogged with debris, causing water to flow into the town. The property owners filed a lawsuit against the bridge’s owner, Burlington Northern Santa Fe Railway Co., in 2014. That legal action came after another group of property owners from Bagley saw a similar lawsuit dismissed in 2012.

Both cases were heard by the same panel of appeals court judges: Ilana Rover, William Bauer and Ann Williams. Stombaugh also represented the property owners in the first case, although he did not appear in court on their behalf.

The first group’s lawsuit, filed in 2008 in Grant County Circuit Court, contended that BNSF did not properly maintain or design the bridge. The case bounced back and forth between state and federal courts and was eventually dismissed in 2010 by Judge Barbara Crabb, who found the claim was barred because no complaint had first been filed with the railroad, as required by state statute, and that state statute barred claims for damages. The Seventh Circuit affirmed Crabb’s ruling in 2012.

More than a year later, the second group of residents brought suit. This time, Stombaugh was the lead attorney and filed the lawsuit in Arkansas state court because BSNF also did business there and because the law there could have produced a more favorable result. The case was identical to the earlier lawsuit except that it made no allegations about the construction and design of the bridge.