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Sanctions for ‘Pure Zanyism’ Lawsuit Upheld on Appeal

April 7, 2021, 2:45 PM

A district court had the power to sanction three plaintiffs for pursuing an appeal in their frivolous lawsuit, even after the court dismissed their case for lack of jurisdiction, the Fifth Circuit said.

Don, Mackey, and Lonny Peterson and other plaintiffs filed a 192-page complaint claiming that more than thirty people, including judges and court personnel, conspired to cheat them out of property by “taking over” a Harris County, Texas, probate court. They alleged a RICO conspiracy, fraud, and breach of fiduciary duty.

The district court called the plaintiffs’ arguments “pure zanyism.” For example, the defendants’ use of mail and wire services for routine communications didn’t indicate that they were engaged in a RICO conspiracy, the court said. The plaintiffs therefore failed to establish subject matter jurisdiction, the court said.

The plaintiffs filed a motion for a new trial “without meaningful or substantive facts or arguments,” which the court concluded was done in bad faith to escalate costs. The court imposed sanctions and conditional fees of $140,000, to be imposed if the plaintiffs appealed, to cover the defendants’ costs.

The plaintiffs appealed anyway, without success. The Petersons later challenged the conditional fee award.

The U.S. Court of Appeals for the Fifth Circuit upheld the award Tuesday in an unpublished opinion.

The district court retained the jurisdiction to sanction litigants even after dismissing their case, the court said. “If the law were otherwise, a court would be powerless to punish misconduct, however extreme, in a case filed in federal court despite a lack of subject matter jurisdiction,” it added.

The case was heard by Judges Patrick E. Higginbotham, Gregg J. Costa, and Andrew S. Oldham.

Donald T. Cheatham of Houston and Paul E. Nunu of Pasadena, Texas, represent the Petersons. Underwood, Jones & Scherrer PLLC represents itself and Russ Jones. The Harris County Attorney’s office represents the county.

The case is Peterson v. Jones, 5th Cir., No. 20-20130, unpublished 4/6/21.

To contact the reporter on this story: Brian Flood in Washington at bflood@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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