USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________

No. 94-2042

WHITNEY BROS. CO., ET AL.,

Plaintiffs - Appellees,

v.

DAVID C. SPRAFKIN AND JOAN BARENHOLTZ, TRUSTEES

OF THE BERNARD M. BARENHOLTZ TRUST, ET AL.,

Defendants - Appellants.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Joseph A. DiClerico, U.S. District Judge]

___________________

____________________

Before

Torruella, Chief Judge,

___________

Aldrich, Senior Circuit Judge,

____________________

and Cyr, Circuit Judge.

_____________

_____________________

James P. Bassett, with whom Orr and Reno, P.A. and Samuel M.
________________
__________________
_________
Sprafkin, were on brief for appellants.
________

James R. Muirhead, with whom Peter D. Anderson and McLane,

__________________
__________________
_______
Graf, Raulerson & Middleton Professional Association, were
_______________________________________________________
brief for appellees.

on

____________________

July 20, 1995

____________________

TORRUELLA, Chief Judge.

TORRUELLA, Chief Judge.
___________

Defendants

were

attorneys'

fees.

Company

("Whitney

properly

At issue here

required

to

pay

Plaintiffs/appellees

are

Brothers") and

Griffin

M.

is whether the

the

Plaintiffs'

Whitney

Brothers

Stabler, Whitney

Brothers'

president,

chief

executive

officer

and

director.

Defendants/appellants, David C. Sprafkin and Joan Barenholtz, are

the

trustees

of

the

Bernard

M.

Barenholtz

Trust,

Whitney

Brothers' majority shareholder.

In the underlying litigation, Plaintiffs sued to compel

Defendants to sell their stock

written buy/sell

district

held

contract.

in Whitney Brothers pursuant to a

After

court ordered the sale

that the Plaintiffs

two years of

at Defendants' asking price and

were entitled to

price with a prepayable promissory note.

__________

concluded

that

the

under the buy/sell

its inherent

Defendants had

satisfy the purchase

The district court also

resisted

agreement in bad faith, and

powers to

shift the

litigation, the

their obligations

accordingly used

Plaintiffs' attorneys'

fees.

The

district court

alia, the
____

predicated its bad

Defendants'

faith finding

continuous insistence

on, inter
_____

that the

purchase

price was not prepayable.

On

appeal, we

with respect

to prepayment.

Reconsider the

reversal on

held that the

exclude

reversed the district

imposition of

The Defendants

attorneys' fees

the prepayability of

fee award was

fees earned

the note.

court's judgment

filed a

in

The

still justified but

in connection

-2-

with

Motion to

light of

our

district court

amended it

the prepayment

to

issue.

Defendants now appeal.

For the following reasons, we vacate that

portion of the court's order imposing fees and remand for further

proceedings consistent with this opinion.

BACKGROUND
BACKGROUND

Whitney

Brothers is a

New Hampshire

produces wooden learning materials.

62.6% of

the company's

corporation that

Bernard Barenholtz

outstanding shares in

1969.

acquired

Ten years

later, he transferred

these shares to the

Bernard M. Barenholtz

Trust

and

and

(the

"Trust")

Sprafkin trustees.

named

himself

Plaintiff Griffin

defendant

David

Stabler owned 32.7% of the

shares, and his son, David Stabler, owned the remaining 4.7%.

On

January 27, 1987,

and Griffin Stabler

Agreement").

Trust's

Whitney Brothers,

executed a written buy/sell

the trustees,

agreement ("The

Under The Agreement, Whitney Brothers would buy the

shares

within

ninety

days

of the

death

of

Bernard

Barenholtz and buy Griffin Stabler's shares within ninety days of

Stabler's death.

would plug

the purchase price,

an agreed-upon appraisal into a

the purchase

price.

appraisal, they

into the

To determine

If

would each

formula.

the

parties

The contract

formula to determine

could not

get their own

agree

and plug

per

annum.

The

Agreement

did

not

on

an

the average

also provided for payment

promissory note, with monthly installments over ten

interest

the parties

by a

years at 10%

mention whether

prepayment of the note was permissible.

On

Defendants')

February

3,

1987,

Bernard

Barenholtz'

(and

attorney Samuel M. Sprafkin wrote a letter advising

-3-

Mr.

Barenholtz that

without

penalty.

orally agreed to

the promissory

The

note

district court

should be

found

prepayable

that the

the letter's prepayment provision.

parties

Barenholtz

then placed the letter in a file with the written contract.

When

daughter,

position.

Bernard Barenholtz died,

defendant

Joan

few days

on August 5,

Barenholtz,

later,

assumed

plaintiff Stabler

Sprafkin discussed

the contract's required

the

E.F. Greene

parties asked

Whitney

Brothers.1

Whitney Brothers

Whitney

to

Sprafkin

accepted it.

Brothers tendered to

update a

rejected

Relying

1989, his

his

trustee

and defendant

stock sale.

One of

past appraisal

of

Greene's

appraisal;

on Greene's

appraisal,

Defendants a prepayable promissory

note for $1,178,000 for the stock.2

Instead of responding immediately, Defendants secured a

significantly

higher appraisal

estate appraiser from New York

Brothers'

tender

by

letter,

from

City.

Alfred

Schimmel,

real

They then rejected Whitney

without

mentioning

the

note's

prepayment

clause.

When

Stabler

learned

of

Defendants'

appraisal, he rejected it as too high.

Ultimately, Plaintiffs

the stock.

sued to compel

Ten months later, on

their cross-motion

for summary

the transfer of

December 13, 1990, as

part of

judgment, Plaintiffs offered

to

____________________

The parties disagree over who requested the update.

Defendants

contend that Stabler made the

they did not accept Greene's

tender knowing that

appraisal and planned to obtain one

of their own.

-4-

tender

either $1,349,3433

that The

immediately or,

Agreement did not

ten years at 10% interest.

contend that they

$145,000

worth of

the

second option

Defendants

rejected it because: (1)

had accrued since

after the death of Bernard

invalid because the

prepayment

permit prepayment, that

interest that

was

was

found

amount over

prohibited.

and

upon a

Plaintiffs

in

bad

it omitted

November 3,

Barenholtz, and (2) it

first option permitted

was conditioned

continually

the court

Defendants again rejected the tender.

They now

1989, 90 days

if

prepayment, and

court judgment

maintain

faith

that

resisted

that

the

their

obligations under The Agreement so that they could sell the stock

to one of Whitney Brothers' competitors at a higher price.

In response to the cross-motions for summary

the district court: (1)

(2) found that

stock

price.

ordered Defendants to sell their

Plaintiffs were not entitled to

and (3) decided

judgment,

that a trial was

prepay the note;

necessary on the issue

See Whitney Bros. Co.

___ __________________

stock;

v. Sprafkin,
________

of the

No. 90-54-S

(D.N.H. filed June 5, 1991)(the "Summary Judgment Opinion").

After a

which it: (1)

six-day trial,

required the Plaintiffs to pay

stock;4 (2) reconsidered

order

the court

and ruled that

____________________

issued an

$1,349,343 for the

and reversed, sua sponte,

__________

the parties' oral

order in

its previous

agreement regarding the

This

was the price calculated under the

contract by plugging

the average of the two appraisals into the formula.

The

court

held that

the

Plaintiffs were

summary-judgment-motion stipulation

that

the

bound
stock

by
price

their

was

$1,349,343.

-5-

prepayability of

the note was

binding and, therefore,

Plaintiffs

could pay for the stock

note; (3)

ruled that interest on the

that the

with a prepayable promissory

note would begin to accrue

when it was executed, and not

powers to

their

before; and (4) used its

inherent

assess attorneys' fees against the Defendants based on

bad faith

conduct throughout

the

litigation.5

Whitney
_______

Bros. Co. v. Sprafkin, No. 90-054-S, 1992 WL 686272 (D.N.H. Sept.

_________
________

30, 1992)("the Order").

The

Order cited the Defendants' refusal

to accept a prepayable note despite their oral agreement to do so

as one of five instances of their bad faith.

On

reversed

appeal

the district

prepayability of the

the

Plaintiffs'

(the

"First

court's

Appeal"),

judgment

with

note, holding that The

efforts

to

prepay

we,

inter alia,
___________

respect

to

the

Agreement precluded

regardless

subsequent oral agreement provided for prepayment.

of

whether

Whitney Bros.
_____________

Co. v. Sprafkin, 3 F.3d 530 (1st Cir. 1993).

___
________

Defendants

reconsider the

then filed a

imposition of

motion asking that

attorneys'

reversal on the prepayment issue.

fees in

the court

light of

The court denied the Motion to

Reconsider without a hearing,6 holding that the integrity

court's previous

bad

faith

our

finding was

not

damaged

of the

by

this

____________________

Although the

parties briefed the

issue, the

district court

imposed the fee award without the benefit of a hearing.

Judge Stahl, who presided over the trial and issued the Order,

requested that the

was
Judge

appointed to
DiClerico

matter be assigned to another

the Court
presided

of Appeals
over

the

for the
remainder

judge after he

First Circuit.
of

including the Defendants' Motion for Reconsideration.

-6-

the

case,

Court's

however,

reversal

amend the

on

the

fee

prepayment issue.

award

to exclude

connection with the prepayment issue.

The

all

court

fees earned

did,

in

Defendants now appeal.

STANDARD OF REVIEW
STANDARD OF REVIEW

We

review a district

under its inherent power for

NASCO, 501 U.S. 32, 55

_____

that the

court's imposition

of sanctions

an abuse of discretion, Chambers v.

________

(1991), giving recognition to the premise

"district court

is better situated

than the

court of

appeals

dependent

whether

to marshal

the

pertinent

legal standard" that

sanctions are

Corp., 496 U.S.

_____

facts

the

fact-

informs its determination

as to

warranted.

384, 402 (1990).

and apply

Cooter & Gell v.

_______________

We

nonetheless remain mindful

that a "district court would necessarily abuse

it

based its

ruling on

an erroneous

Hartmarx
________

view of

clearly erroneous assessment of the evidence."

its discretion if

the law or

on a

Id. at 405.
___

DISCUSSION
DISCUSSION

The issue

before us

is whether

the district

court's

imposition of attorneys' fees constitutes an abuse of discretion,

particularly in

light of our

reversal on the

prepayment issue.

The

allege

the

raised

Plaintiffs

that

Defendants

frivolous

defenses in bad faith solely to avoid their obligations under The

Agreement

Whitney

so that

they

could

sell the

Brothers' competitors at

a higher price.

the Plaintiffs contend, the fee award

reversal on the

prepayment issue.

securities

to one

of

Accordingly,

is appropriate despite our

The Defendants

maintain that

they resisted the Plaintiffs' attempts to implement The Agreement

-7-

in good

that

faith because, inter alia, (1) the

___________

the note

was

concerned that the

prepayable, and

Defendants

their obligations

further

maintain

prepayment issue completely

the course

therefore

of

(2) they

were legitimately

Plaintiffs were both financially

incapable of fulfilling

The

Plaintiffs insisted

the

abused

that

our

and

that

discretion in

Agreement.

reversal

justifies their position

litigation,

its

under The

and legally

the

assessing

on

the

throughout

district

court

attorneys' fees

against them.

With regard to

the original finding of

bad faith, the

district court stated the following:

A retrospective
reveals

look at

Defendants'

resisting

their

under The

Agreement.

this litigation
bad

obligation

faith
to

In support

in

perform
of its

bad

faith ruling,

the

Court makes

the

following observations and findings:

1.

In

initially

obligation

resisting

under

Defendants

relied

argument

that

The
primarily

to

upon

advanced

no

either

support

their

the

were

perform.

Defendants
to

Agreement,

Plaintiffs

financially able

their

not

However,

expert

opinion

claim

or to

counter the opinion of Plaintiffs' expert

that Plaintiffs

were

able to perform.

Moreover, The Agreement

itself

certainly

contemplate the
power"
the

did

Finally, an

sort of

stages

explicitly

financial "veto

advanced

in fact,

of

this

case.

examination of the financial

by

supports a finding

the

not

and

Defendants attempted to assert in

earlier

data

indeed ready

Plaintiffs'

amply

that Plaintiffs were,

in a position to

perform under

Agreement;

2.

Samuel

Sprafkin,

despite

fiduciary

obligation

to

Whitney

director

thereof,

actively

his
as

opposed

-8-

implementation of the oral agreement that

Plaintiffs'
Agreement

obligation
would

be

under

prepayable

The
without

penalty;

3.

Both

testified

David

and

that Samuel

speak with E.F. Greene

of the

August

light of

Samuel

Sprafkin

Sprafkin did

not

during the course

10, 1989,

meeting.

all the evidence in

In

this case,

such testimony simply was not credible;

4.

Both

David

and

Samuel

Sprafkin

testified
copy
10,

that

prior to

being

shown a

of The Agreement during the August

1989,

meeting

at

the

home, they had forgotten

Barenholtz'

about it.

Such

testimony simply was not credible;

5.

Defendants'

proceeding to

sole

trial after the

ruled on

the parties'

summary

judgment

implementing

for

Court had

cross-motions for

was

utilization of the

Agreement.

reason

to

seek

the

Schimmel appraisal in

Article

Three

The Schimmel

of

The

appraisal was,

however, so lacking in factual foundation

that it would not have assisted the trier
of fact on the
value.

It

inadmissible

issue of the

thus would
under

at the

have been

Rule

Evid., were the price

702,

(In so stating,

Plaintiff's

Testimony

and

Motion
Report

Fed.

stage of

adopts in toto the argument

_______
the

ruled
R.

issue not resolved

summary judgment

proceedings.

securities'

these

the Court

set forth in

to

Strike

the

of

Alfred

E.

Schimmel.)

Nonetheless, despite

both Defendants'

acknowledged duty as
a competent
and

the

trustees to advance

appraisal, see Tr.

obvious

VI, 118,

inadequacy

of

the

Schimmel appraisal, Defendants continued,

indeed continue, to endorse the

Schimmel

appraisal.

While

perhaps none

of the

foregoing

facts and findings, standing alone, would

persuade the

Court to

all of their

fees, the sum total

delineated behavior

award Plaintiffs'

convinces the

-9-

of the
Court

that

such a

fee

Indeed,

the

indicates

that

have

to

had

award is
record

appropriate.
overwhelmingly

Plaintiffs

should never

institute this

action

to

enforce their clear right to purchase the

disputed

securities

Agreement.

[FN17]7

Court rules that

to

pursuant

recover

to

Accordingly,

The
the

Plaintiffs are entitled

their attorneys'

fees

from

Defendants. . . .[FN18]8

Whitney Bros. Co., No. 90-054-S, 1992 WL 686272 at *7.

_________________

We

prepayment

must

first

analyze whether

issue significantly affects

the fee award.

The

our

reversal

on the

the overall integrity of

order states that "the record overwhelmingly

indicates that Plaintiffs should never have had to institute this

action

to enforce

securities

instances

their clear

pursuant to

of

alleged

The

bad

right

to purchase

Agreement."

faith,

It

including

the disputed

enumerates

the

five

Defendants'

____________________

Footnote 17 states: "At

minimum,

Defendants

could

have

accepted the December 13, 1990, Tender, which adopted Defendants'

purchase

price, and terminated this costly litigation."

Bros. Co., No. 90-054-S, 1992 WL 686272 at n.17.

_________

Footnote 18 states:

The

Court's

Defendants

decision

responsible

Plaintiffs' fees

in this

that

price issue

However,

of

at

necessarily

informed

Defendants

exhibited

six-day trial.

be patently unfair
to pay any amount of
in this case.

been

have been
judgment.

ruling on
by the

of

the fact

should

fees is

bad

throughout

In light

bad faith, the Court

all

summary

the Court's

hold

case has

due consideration of

disposed

Id. at n.18.

for

made with
the

to

faith
the

of Defendants'

finds that it would

to require Plaintiffs
the attorneys' fees

Whitney
_______

___

-10-

continuous

insistence

that

the debt

was

not

prepayable, and

clearly states that the fee award is predicated on the "sum total

of

the delineated behavior."9

Accordingly, because our reversal

on the prepayability issue undermines the fee award, we therefore

must

determine whether

the other

enumerated

faith are sufficient to support the fee award.

instances of

bad

We

begin

assessed the

by

emphasizing

fees pursuant

"manage [its] own affairs."

630-31

(1962).

court

may use

against

It is

its

to the

that

to

"'acted in

wantonly, or for oppressive reasons,'"

dispute that

Piper,
_____

447

a district

bad

fees

faith, vexatiously,

Chambers, 501 U.S. at 45________

Wilderness Society,
__________________

258-59 (1975)); see also Roadway Express, Inc. v.

________ ______________________

U.S.

752, 765-66

exception to general

make

power" to

assess attorneys'

46 (quoting Alyeska Pipeline Service Co. v.

_____________________________

421 U.S. 240,

court

Link v. Wabash R. Co., 370 U.S. 626,

____
_____________

beyond serious

has

district

court's "inherent

inherent powers

party that

the

(1980)

(recognizing

rule that federal courts

"bad faith"

cannot ordinarily

fee-shifting awards); Jones v. Winnepesaukee Realty, et al,

_____
___________________________

990 F.2d 1, 3 (1st

"[b]ecause

of

Cir. 1993)(citations omitted).

their

very

exercised with restraint

44 (citation omitted).

shift attorneys'

potency,

inherent

and discretion."

Nevertheless,

powers

must

be

Chambers, 501 U.S. at

________

Accordingly, a court's

inherent power to

fees "should be used sparingly and reserved for

egregious circumstances."

Jones, 990 F.2d

_____

at 3.

Significantly,

____________________

As we noted above, the district court took this statement into

consideration by

reducing the fee

award to the extent

fees were attributable to the prepayment issue.

-11-

that the

we have held that a district court exercising its inherent powers

in

this

fashion

must

describe

the

bad

"sufficient specificity," accompanied by

of the reasons justifying the award."

Continental, 679 F.2d

___________

award

for district

detailed

with

See Gradmann & Holler

___ _________________

to

1982) (vacating

provide a

v.

fee

sufficiently

justification)(citing F.D. Rich Co. v. United States ex

_____________
________________

rel. Industrial Lumber Co., 417

____________________________

Jones,
_____

conduct

a "detailed explanation

272, 274 (1st Cir.

court's failure

faith

990

F.2d

at

3-4

(holding

U.S. 116,

that

the

129 (1974));

cf.
___

district court's

"specific,

meticulously

supportable on appeal).

detailed

finding

of

bad

faith"

was

These principles, when combined with the

effect of our reversal on

the prepayment issue, render the order

assessing fees unsustainable.

The

district court predicated its first finding of bad

faith on the Defendants'

support

of their

earlier insistence

financially incapable

court could find

failure to advance expert

that

of performing.

the Plaintiffs

We agree that

bad faith where a party

defense without any

reasonable hope of

merits.

See
___

U.S. 32;

501

were

a district

maintains an unfounded

action or

Chambers,
________

testimony in

see also
_________

prevailing on

Perichak
________

v.

International Union of Elec. Radio & Machine Workers, Local 601,

_________________________________________________________________

AFL-CIO, 715 F.2d 78, 83 (1978) (awarding

_______

fees because plaintiff

brought

action without "any reasonable prospect of prevailing on

the merits"); Nemeroff v. Abelson,

________
_______

704 F.2d 652, 659-60 (2d Cir.

1983) (affirming an award of fees based on a finding of bad faith

in maintaining an action after it became clear that the claim was

-12-

no longer

clear.

colorable).

In

their

Nevertheless,

cross-motion

for

the facts here are

summary

not so

judgment,

the

Defendants advanced eight grounds for resisting their obligations

under the Agreement.

(1)

Whitney

permitted

The stated grounds

Brothers'

it to

make

financial

the

included the following:

condition

installment

would

payments;

not

(2)

have

Whitney

Brothers' funds were restricted because its bank had liens on the

company's assets; and

because, under

repurchase

(3) payment of the note

New Hampshire

its

own

shares

corporate law,

only

with

would be unlawful

a corporation

unrestricted

can

surplus.

Although the district court's Summary Judgment Opinion holds that

none

of

the

contemplated

order imposing

why they

stated

by the

grounds

preclude

Agreement, neither

the

it

stock

repurchase

nor the

subsequent

fees explains how these defenses are frivolous or

were objectively

or subjectively

unreasonable at

the

time

they were advanced.

Cf. Blue
___ ____

F.2d

525,

1990)(finding

544

claim-by-claim

(4th Cir.

description

of

the

v. U.S. Dept. of Army, 914

___________________

that

district court's

frivolous

nature

of

the

plaintiffs' complaint demonstrated clearly that their "widespread

charges

of

racial

discrimination

regard for the truth . .

[were

leveled]

. in order to harass and

without any

embarrass the

personnel at Fort Bragg").

The

third and

predicated on the

Samuel

instances

district court's

Sprafkin had

credible."

fourth

We have

offered

-13-

bad

belief that

testimony

no doubt that

of

that

faith

both David

"simply

when a party

was

were

and

not

has materially

perjured himself, this, standing alone, is sufficient grounds for

finding bad faith.

See Chambers, 501 U.S. at 46 (noting that the

___ ________

"inherent power extends

see also
_________

(holding

Perichak, 715
________

that

[made] under

his

the

v.

F.2d

at

defendant's

oath' are, having

case, alone,

Carri n
_______

to a full

enough to

range of litigation

84-85 &

"'materially

(3d Cir.

1983)

false

statements

been critical to the

success of

support a

Yeshiva University,
__________________

n.9

abuses);

535

finding of

F.2d

722 (2d

bad faith");

Cir.

1976)

(affirming fee award

after a civil rights bench

trial where the

court found that plaintiff's testimony was an "unmitigated tissue

of lies").

However, "[a]

factfinder's decision that one party's

version of the events is more credible than the other party's is,

without more, insufficient to justify an award of attorneys' fees

."

Roth
____

1986)(discussing

Blue, 914 F.2d

____

v.

Pritikin,
________

fee awards under

787

54,

58

the Copyright Act);

544 (noting that "not

district court credits one side's

F.2d

(2d

Cir.

see also
________

every instance in which

witnesses over another's is an

occasion for sanctions").

Here,

the

Sprafkins' testimony,

case,

simply

district

court

"[i]n light of

was

not

merely

all the

credible."

stated

that

evidence in

It

set

forth

the

this

no

explanation for this conclusion.

cannot

predicate

the use

of

conclusory statement that the

Blue, 914 F.2d

____

assessed against

We think that a district court

its

mere

witnesses were not credible.

Cf.
___

at 544 (holding

inherent

powers on

that although the fee

plaintiffs in a

-14-

complex civil rights

award was

suit, it

was

proper

because

the district

court's

order

meticulously describes each

instance of perjury and

Because the

neither explained

district court

that the Sprafkins had perjured themselves nor

imposing fees

bad faith).

why it

concluded

explained why any

allegedly untrue statements were material, we cannot say that the

bad

faith conduct was described with "sufficient specificity" or

accompanied

the

by a "detailed explanation of the reasons justifying

award."

therefore

See Gradmann & Holler,

___ ___________________

679 F.2d

at

274.

We

conclude that the district court abused its discretion

when it based

the fee award on the

unexplicated conclusion that

the Sprafkins "simply [were] not credible."

The court predicated

the

Defendants' endorsement of

its fifth finding of bad faith on

the Schimmel appraisal.

In its

order, the

lacking

court found the

in

factual

Schimmel appraisal to

foundation,

adopting

be completely

the

Plaintiffs'

contention that "the trustees and their attorney found someone in

Mr. Schimmel

who would say

The Order states

anything they wanted him

that the Defendants proceeded to

to say."10

trial for the

sole purpose of advancing the Schimmel appraisal "despite [their]

acknowledged

The

record

duty as trustees to advance a competent appraisal."

fully

supports this

finding,

indicating

that the

Schimmel appraisal relied upon inflated rental and capitalization

rates and disregarded the fact that the Whitney Brothers facility

____________________

10

The

district

Plaintiffs' arguments

court's

fee

set forth

Testimony of Alfred E. Schimmel.

order
in their

adopted

in toto
________

Motion to

the

Strike the

-15-

was located in an "A-2

the

district court's

with a "qualified

understand the

Appraisal

Conduct.

flood zone."11

finding that

The record

also supports

Schimmel neither

associated

local appraiser" nor spent "sufficient time to

nuances of the

local market" as required

Foundation's Standards

of

by the

Professional Practice

and

Moreover, Michael Monks, a local industrial real estate

broker testified that the Sprafkins were aware of the infirmities

infecting the Schimmel opinion before

they advanced it at trial.

Consequently, we find that the district court's fifth finding

bad faith

was well

sufficient

grounded in

particularity

and

the record

is

and set

accordingly

of

forth with

sustainable

on

appeal.

The

predicated

district

the fee

court's

award

on

fee

the

order

indicated

cumulative

effect

that

of

it

five

specific instances of alleged bad

faith and its finding that the

"record

that

overwhelmingly indicates

Plaintiffs should

never

have had to institute this action to enforce their clear right to

purchase

the

disputed securities

Although

we affirm

the fifth

pursuant

finding of

to

The Agreement."

bad faith,

the First

Appeal obviated the second, and further examination of

the order

seriously

Moreover,

undermines the facial validity of the remaining three.

we

do

not

agree

that

the

record

overwhelmingly

indicates that the Defendants improperly forced the Plaintiffs to

____________________

11

Mr. Green testified that the area floods not only seasonally,

but also
court

was

during periods of
entitled to

find

heavy rain.
that

this

considered in any competent appraisal.

-16-

We think the
data would

district
have

been

file

suit.

As we

noted

above, neither

the district

court's

Summary Judgment Opinion nor the Order explains why

the defenses

maintained

subjectively

by the

unreasonable

Defendants

when

Defendants were

asserted.

ultimately

objectively or

Perhaps

prevailed

on

more

significantly, the

the

prepayment

issue,

apparently vindicating their rejection of the Plaintiffs' initial

tenders.

This case

involves a complex set

that occurred both in and out of court.

district

court's cursory

award is

simply inadequate,

of facts and

events

In the end, we think the

explanation of the

particularly in

bases for

the fee

light of

the fact

Supreme

Court's

that no hearing was held on the issue.

We

remain

pronouncement that

cognizant

of

the

appellate tribunals should

give deference to

the

district courts'

"streamline

determinations on

the litigation

process

by

sanctions

freeing

in order

the

to

appellate

courts from the duty of reweighing evidence . . . already weighed

and considered by

at 404.

this

In

the context of a

deference

explained

its

is only

Cooter & Gell, 496 U.S.

______________

court's inherent powers,

proper

its actions with

find that the

issue

the district court."

where

the district

sufficient detail.

combined effect of our reversal

and the district

court's failure to

justifications render its

abuse of discretion.

however,

court

Accordingly, we

on the prepayment

adequately set forth

imposition of attorneys'

We therefore

has

vacate the district

fees an

court's

fee order and remand so that the district court can make specific

findings consistent with this opinion.

-17-

Vacated.
_______

-18-