                                                              FILED
                                                  United States Court of Appeals
                     UNITED STATES COURT OF APPEALS       Tenth Circuit

                            FOR THE TENTH CIRCUIT                      February 19, 2013

                                                                      Elisabeth A. Shumaker
                                                                          Clerk of Court
ELSA ANCHONDO, on behalf of herself
and all others similarly situated,

             Plaintiff-Counter-
             Defendant-Appellee,

v.                                                         No. 12-2002
                                               (D.C. No. 1:08-CV-00202-RB-WPL)
STEVEN RICHARD DUNN; THOMAS                                 (D. N.M.)
BACKAL,

             Appellants,

and

ANDERSON, CRENSHAW and
ASSOCIATES, L.L.C.,

             Defendant.


                            ORDER AND JUDGMENT*


Before HARTZ, EBEL, and GORSUCH, Circuit Judges.




*
      After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
       Steven Dunn is a lawyer who defended Anderson, Crenshaw and Associates,

L.L.C. (ACA) in a class action under the Fair Debt Collection Practices Act

(FDCPA). When the litigation finally settled, the court awarded the plaintiff, Elsa

Anchondo, her fees and costs. But ACA was unable to pay those fees and costs —

indeed, it is now bankrupt — and ACA’s insurer refused to cover the loss because

ACA failed to file a timely claim. After hearing evidence from the parties, the

district court found that Mr. Dunn and Thomas Backal, ACA’s president and chief

operating officer, acted in bad faith to deprive Ms. Anchondo of a potential recovery

from the insurer. As sanction for their litigation misconduct, the court ordered

Mr. Dunn and Mr. Backal to pay Ms. Anchondo and her counsel the damages and

fees owed by ACA plus the costs incurred in litigating this matter.

       More specifically, the district court found that Mr. Dunn and Mr. Backal knew

ACA had a professional liability policy sufficient to cover the amounts owed to

Ms. Anchondo; that the pair acted in bad faith in failing to disclose (indeed, denying)

the existence of this coverage despite appropriate requests during the discovery

process; that the pair acted in bad faith in failing to file a timely claim on the policy;

and that Mr. Dunn’s special relationship with ACA and his participation in the

scheme made it appropriate to hold him jointly liable with Mr. Backal. The court

considered lesser sanctions but, noting repeated misconduct by Mr. Dunn and

Mr. Backal and their defiance of earlier court-ordered sanctions, concluded that its




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“monetary sanction is the least available sanction to adequately compensate the

Plaintiff, punish Dunn and Backal, and deter similar misconduct.” Aplt. App. at 6.

      The power of a district court to sanction bad faith litigation tactics is well

settled. See, e.g., Morganroth & Morganroth v. DeLorean, 213 F.3d 1301, 1317

(10th Cir. 2000), overruled on other grounds by TW Telecom Holdings Inc. v.

Carolina Internet Ltd., 661 F.3d 495 (10th Cir. 2011). Still, Mr. Dunn says, the

district court erred when it rejected his innocent explanation for events and his

assurance that he never intended to hide insurance information from the plaintiff.

Mr. Dunn, however, offered different and conflicting excuses for failing to reveal the

existence of insurance during discovery, and a finder of fact is ordinarily free to find

such inconsistencies undermine a witness’s credibility. Wessel v. City of

Albuquerque, 463 F.3d 1138, 1145 (10th Cir. 2006) (“We give the district court’s

determinations regarding the credibility of witnesses great deference.”).

      Mr. Dunn replies that, at the least, the district court went astray by resting its

sanctions award solely on its disbelief of Mr. Dunn’s and Mr. Backal’s testimony.

And this, he says, violates the rule that “discredited testimony is not considered a

sufficient basis for drawing a contrary conclusion” that they acted in bad faith. Bose

Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485, 512 (1984). But as it happens

the district court cited a number of facts supporting its decision beyond its disbelief

of Mr. Dunn’s and Mr. Backal’s explanations for their conduct. The court relied on

the fact that ACA had professional liability coverage for suits arising from its


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wrongful acts; that Mr. Dunn and Mr. Backal knew this; and that during discovery

Mr. Dunn failed to turn over documents reflecting insurance applicable to the suit;

and that the pair allowed the period for filing a timely claim to lapse. All these facts,

quite apart from and in addition to the court’s disbelief of Mr. Dunn’s and

Mr. Backal’s testimony, contributed to its inference of bad faith.

       Separately, Mr. Dunn challenges the district court’s finding that his

relationship with ACA exceeded that of a normal attorney-client relationship. But

the evidence demonstrates a peculiarly close relationship between Mr. Dunn and

Mr. Backal. Mr. Dunn was a signatory on ACA bank accounts; accounts show him to

be a manager of ACA; Mr. Dunn was a managing officer of two corporations with

Mr. Backal; and Mr. Dunn located his law office at ACA’s offices until ACA went

out of business. In these circumstances, we cannot say the district court’s finding of

a particularly special and close relationship was clearly wrong. Neither do we

understand Mr. Dunn to attack the district court’s legal premise that an attorney with

these sorts of close ties to a client might be held jointly responsible for a client’s

misdeeds in which he actively participated.

       None of Mr. Dunn’s remaining arguments is any more persuasive than these

and the district court’s judgment with respect to him is affirmed. For her part,

Ms. Anchondo requests attorney fees and costs with respect to Mr. Dunn’s appeal

under the FDCPA’s fee-shifting provision, 15 U.S.C. § 1692k(a)(3). Mr. Dunn has

not opposed this request. Accordingly, we grant the request and remand the matter to


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the district court to determine an appropriate amount. See Anchondo v. Anderson,

Crenshaw & Assoc., L.L.C., 616 F.3d 1098, 1107 (10th Cir. 2010). Pursuant to this

court’s earlier order, Mr. Backal’s appeal remains stayed as a result of his personal

bankruptcy proceedings. Therefore, that portion of the appeal remains abated and

judgment shall not issue with respect to Mr. Backal.


                                               Entered for the Court


                                               Neil M. Gorsuch
                                               Circuit Judge




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