Missouri Lawyer Must Pay $50,000 Plus Fees Over Meritless Suit

An attorney’s role in presenting baseless allegations, claims, and legal arguments in a homeowner’s suit to prevent foreclosure will cost him $50,000 in sanctions and an opponent’s legal fees, estimated at more than $65,000, a federal court in Missouri ruled.

The lawyer, Gregory Leyh, also had an improper purpose in suing a local defendant, according to the court—to keep the case in state court where he could argue in person to a judge.

The homeowner will have to pay her opponent, a law firm that served as successor trustee of the deed of trust, $5,000 in partial recompense as well, Judge Greg Kays said Thursday for the U.S. District Court for the Western District of Missouri. She’s a disbarred attorney in declining health, with limited financial resources, Kays said.

The suit is the last of four filed by Gwendolyn Caranchini “to delay the process and increase the cost of foreclosure, dissuading the Note holder and others from foreclosing,” Kays said, referring to the documentation for the $300,000 adjustable-rate loan.

Caranchini, represented by Leyh, sued loan servicer Nationstar Mortgage LLC and law firm Martin Leigh PC, the trustee, for misrepresentations. She wasn’t in default and didn’t owe money on the note, she said. And Martin Leigh didn’t hold the note anyway, she said.

But Caranchini had stopped making payments on the loan and Martin Leigh in fact possessed the note, according to the court.

After the court dismissed the claims against Martin Leigh as improperly joined and kept the case in federal court, the firm sought sanctions.

Leyh was an “untrustworthy witness” at the sanctions hearing, the court said.

In addition to filing the suit with various unsubstantiated allegations, Leyh also argued, without a legal basis, that Martin Leigh owed a duty to investigate who held the note, the court said. The claims were frivolous and brought for an improper purpose, according to the court.

“Filing a frivolous claim against an in-state successor trustee to defeat diversity appears to be Leyh’s modus operandi when representing mortgagors against lenders,” Kays said, citing hearing testimony in a different case in which Leyh described delaying or averting his clients’ evictions.

“Deliberately filing frivolous claims to prevent removal to federal court is sanctionable conduct,” the judge said.

Caranchini represented herself after Leyh stopped representing her. Leyh is represented by Graves Garrett LLC.

Dykema Gossett PLLC represents Nationstar. Armstrong Teasdale represents Martin Leigh.

The case is Caranchini v. Nationstar Mortg., LLC, 2021 BL 333737, W.D. Mo., No. 4:17-cv-00775, 9/2/21.