
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  on          _______________________________________________________          brief for appellees.                                 ____________________                                    July 20, 1995                                 ____________________                    TORRUELLA, Chief Judge.   At issue here  is whether the                    TORRUELLA, Chief Judge.                               ___________          Defendants  were   properly  required  to  pay   the  Plaintiffs'          attorneys'  fees.    Plaintiffs/appellees  are  Whitney  Brothers          Company  ("Whitney  Brothers") and  Griffin  M.  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  in Whitney Brothers pursuant to a          written buy/sell  contract.  After  two years of  litigation, the          district  court ordered the sale  at Defendants' asking price and          held  that the Plaintiffs  were entitled to  satisfy the purchase          price with a prepayable promissory note.  The district court also                       __________          concluded  that  the  Defendants had  resisted  their obligations          under the buy/sell  agreement in bad faith, and  accordingly used          its inherent  powers to  shift the  Plaintiffs' attorneys'  fees.          The  district court  predicated its bad  faith finding  on, inter                                                                      _____          alia, the  Defendants'  continuous insistence  that the  purchase          ____          price was not prepayable.                    On  appeal, we  reversed the district  court's judgment          with respect  to prepayment.   The Defendants  filed a  Motion to          Reconsider the  imposition of  attorneys' fees  in  light of  our          reversal on  the prepayability of  the note.  The  district court          held that the  fee award was  still justified but  amended it  to          exclude  fees earned  in connection  with  the prepayment  issue.                                         -2-          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  corporation that          produces wooden learning materials.  Bernard Barenholtz  acquired          62.6% of  the company's  outstanding shares in  1969.   Ten years          later, he transferred  these shares to the  Bernard M. Barenholtz          Trust  (the  "Trust")  and  named  himself  and  defendant  David          Sprafkin trustees.  Plaintiff Griffin  Stabler owned 32.7% of the          shares, and his son, David Stabler, owned the remaining 4.7%.                    On  January 27, 1987,  Whitney Brothers,  the trustees,          and Griffin Stabler  executed a written buy/sell  agreement ("The          Agreement").  Under The Agreement, Whitney Brothers would buy the          Trust's  shares  within  ninety  days  of the  death  of  Bernard          Barenholtz and buy Griffin Stabler's shares within ninety days of          Stabler's death.   To determine  the purchase price,  the parties          would plug  an agreed-upon appraisal into a  formula to determine          the purchase  price.   If  the  parties  could not  agree  on  an          appraisal, they  would each  get their own  and plug  the average          into the  formula.  The contract  also provided for payment  by a          promissory note, with monthly installments over ten  years at 10%          interest  per  annum.   The  Agreement  did  not  mention whether          prepayment of the note was permissible.                    On   February  3,   1987,   Bernard  Barenholtz'   (and          Defendants')  attorney Samuel M. Sprafkin wrote a letter advising                                         -3-          Mr.  Barenholtz that  the promissory  note  should be  prepayable          without  penalty.   The  district court  found  that the  parties          orally agreed to  the letter's prepayment provision.   Barenholtz          then placed the letter in a file with the written contract.                    When  Bernard Barenholtz died,  on August 5,  1989, his          daughter,  defendant   Joan  Barenholtz,   assumed  his   trustee          position.   A  few days  later,  plaintiff Stabler  and defendant          Sprafkin discussed  the contract's required  stock sale.   One of          the  parties asked  E.F. Greene  to  update a  past appraisal  of          Whitney  Brothers.1     Sprafkin  rejected   Greene's  appraisal;          Whitney Brothers  accepted it.   Relying  on Greene's  appraisal,          Whitney  Brothers tendered to  Defendants a prepayable promissory          note for $1,178,000 for the stock.2                    Instead of responding immediately, Defendants secured a          significantly  higher appraisal  from  Alfred  Schimmel,  a  real          estate appraiser from New York  City.  They then rejected Whitney          Brothers'  tender  by  letter,   without  mentioning  the  note's          prepayment  clause.     When  Stabler   learned  of   Defendants'          appraisal, he rejected it as too high.                    Ultimately, Plaintiffs  sued to compel  the transfer of          the stock.   Ten months later, on  December 13, 1990, as  part of          their cross-motion  for summary  judgment, Plaintiffs offered  to                                        ____________________          1  The parties disagree over who requested the update.          2  Defendants  contend that Stabler made the  tender knowing that          they did not accept Greene's  appraisal and planned to obtain one          of their own.                                         -4-          tender  either $1,349,3433  immediately or,  if  the court  found          that The  Agreement did not  permit prepayment, that  amount over          ten years at 10% interest.  Defendants again rejected the tender.          They now  contend that they  rejected it because: (1)  it omitted          $145,000  worth of  interest that  had accrued since  November 3,          1989, 90 days  after the death of Bernard  Barenholtz, and (2) it          was  invalid because the  first option permitted  prepayment, and          the  second option  was conditioned  upon a  court judgment  that          prepayment  was   prohibited.    Plaintiffs  maintain   that  the          Defendants   continually  and   in  bad   faith  resisted   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  judgment,          the district court: (1)  ordered Defendants to sell their  stock;          (2) found that  Plaintiffs were not entitled to  prepay the note;          and (3) decided  that a trial was  necessary on the issue  of the          stock  price.   See Whitney  Bros. Co.  v. Sprafkin,  No. 90-54-S                          ___ __________________     ________          (D.N.H. filed June 5, 1991)(the "Summary Judgment Opinion").                    After a  six-day trial,  the court  issued an  order in          which it: (1)  required the Plaintiffs to pay  $1,349,343 for the          stock;4 (2) reconsidered  and reversed, sua sponte,  its previous                                                  __________          order  and ruled that  the parties' oral  agreement regarding the                                        ____________________          3  This  was the price calculated under the  contract by plugging          the average of the two appraisals into the formula.          4   The  court  held that  the  Plaintiffs were  bound  by  their          summary-judgment-motion stipulation  that  the  stock  price  was          $1,349,343.                                         -5-          prepayability of  the note was  binding and, therefore,  that the          Plaintiffs  could pay for the stock  with a prepayable promissory          note; (3)  ruled that interest on the  note would begin to accrue          when it was executed, and not  before; and (4) used its  inherent          powers to  assess attorneys' fees against the Defendants based on          their  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  appeal  (the  "First  Appeal"),   we,  inter  alia,                                                               ___________          reversed  the district  court's  judgment  with  respect  to  the          prepayability of the  note, holding that The  Agreement precluded          the  Plaintiffs'  efforts  to  prepay  regardless  of  whether  a          subsequent oral agreement provided for prepayment.  Whitney Bros.                                                              _____________          Co. v. Sprafkin, 3 F.3d 530 (1st Cir. 1993).          ___    ________                    Defendants  then filed a  motion asking that  the court          reconsider the  imposition of  attorneys'  fees in  light of  our          reversal on the prepayment issue.  The court denied the Motion to          Reconsider without a hearing,6 holding that the integrity  of the          court's previous  bad  faith  finding was  not  damaged  by  this                                        ____________________          5   Although the  parties briefed the  issue, the  district court          imposed the fee award without the benefit of a hearing.           6  Judge Stahl, who presided over the trial and issued the Order,          requested that the  matter be assigned to another  judge after he          was  appointed to  the Court  of Appeals  for the  First Circuit.          Judge   DiClerico  presided  over  the  remainder  of  the  case,          including the Defendants' Motion for Reconsideration.                                         -6-          Court's  reversal  on  the  prepayment issue.    The  court  did,          however,  amend the  fee  award  to exclude  all  fees earned  in          connection with the prepayment issue.  Defendants now appeal.                                  STANDARD OF REVIEW                                  STANDARD OF REVIEW                    We  review a district  court's imposition  of sanctions          under its inherent power for  an abuse of discretion, Chambers v.                                                                ________          NASCO, 501 U.S. 32, 55  (1991), giving recognition to the premise          _____          that the  "district court  is better situated  than the  court of          appeals  to marshal  the  pertinent  facts  and apply  the  fact-          dependent  legal standard" that  informs its determination  as to          whether  sanctions are  warranted.   Cooter  &  Gell v.  Hartmarx                                               _______________     ________          Corp., 496 U.S.  384, 402 (1990).  We  nonetheless remain mindful          _____          that a "district court would necessarily abuse  its discretion if          it  based its  ruling on  an erroneous  view of  the law or  on a          clearly erroneous assessment of the evidence."  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  Plaintiffs  allege  that  the  Defendants  raised  frivolous          defenses in bad faith solely to avoid their obligations under The          Agreement  so that  they  could  sell the  securities  to one  of          Whitney  Brothers' competitors at  a higher price.   Accordingly,          the Plaintiffs contend, the fee award  is appropriate despite our          reversal on the  prepayment issue.  The Defendants  maintain that          they resisted the Plaintiffs' attempts to implement The Agreement                                         -7-          in good  faith because, inter  alia, (1) the  Plaintiffs insisted                                  ___________          that  the note  was  prepayable, and  (2) they  were legitimately          concerned that the  Plaintiffs were both financially  and legally          incapable of fulfilling  their obligations  under The  Agreement.          The   Defendants  further  maintain  that  our  reversal  on  the          prepayment issue completely  justifies their position  throughout          the course  of  the  litigation,  and  that  the  district  court          therefore  abused  its  discretion in  assessing  attorneys' fees          against them.                      With regard to  the original finding of  bad faith, the          district court stated the following:                      A retrospective  look at  this litigation                      reveals   Defendants'   bad    faith   in                      resisting  their  obligation  to  perform                      under The  Agreement.  In support  of its                      bad  faith ruling,  the  Court makes  the                      following observations and findings:                         1.   In   initially   resisting  their                      obligation    under     The    Agreement,                      Defendants  relied  primarily   upon  the                      argument   that   Plaintiffs   were   not                      financially able  to  perform.   However,                      Defendants  advanced  no  expert  opinion                      either  to  support   their  claim  or to                      counter the opinion of Plaintiffs' expert                      that Plaintiffs   were  indeed ready  and                      able to perform.  Moreover, The Agreement                      itself  certainly   did  not   explicitly                      contemplate the  sort of  financial "veto                      power"  Defendants attempted to assert in                      the   earlier   stages  of   this   case.                      Finally, an  examination of the financial                      data   advanced   by   Plaintiffs'  amply                      supports a finding  that Plaintiffs were,                      in fact,  in a position to  perform under                      the  Agreement;                         2.   Samuel   Sprafkin,   despite  his                      fiduciary  obligation  to  Whitney  as  a                      director   thereof,    actively   opposed                                         -8-                      implementation of the oral agreement that                      Plaintiffs'    obligation    under    The                      Agreement  would  be  prepayable  without                      penalty;                         3.  Both  David  and  Samuel  Sprafkin                      testified  that Samuel  Sprafkin did  not                      speak with E.F. Greene  during the course                      of the  August  10, 1989,  meeting.    In                      light of  all the evidence in  this case,                      such testimony simply was not credible;                         4.  Both  David  and  Samuel  Sprafkin                      testified  that  prior to  being  shown a                      copy   of The Agreement during the August                      10,  1989,  meeting  at  the  Barenholtz'                      home, they had forgotten  about it.  Such                      testimony simply was not credible;                         5.   Defendants'   sole   reason   for                      proceeding to  trial after the  Court had                      ruled on  the parties'  cross-motions for                      summary   judgment   was  to   seek   the                      utilization of the  Schimmel appraisal in                      implementing   Article   Three   of   The                      Agreement.   The Schimmel  appraisal was,                      however, so lacking in factual foundation                      that it would not have assisted the trier                      of fact on the  issue of the  securities'                      value.   It  thus would  have been  ruled                      inadmissible  under  Rule  702,  Fed.  R.                      Evid., were the price  issue not resolved                      at the  summary judgment  stage of  these                      proceedings.   (In so stating,  the Court                      adopts in toto the argument  set forth in                             _______                      the  Plaintiff's  Motion  to  Strike  the                      Testimony   and  Report   of  Alfred   E.                      Schimmel.)                         Nonetheless, despite  both Defendants'                      acknowledged duty as  trustees to advance                      a competent  appraisal, see Tr.  VI, 118,                      and   the  obvious   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  award Plaintiffs'                      all of their  fees, the sum total  of the                      delineated behavior  convinces the  Court                                         -9-                      that  such a  fee  award is  appropriate.                      Indeed,    the    record   overwhelmingly                      indicates  that  Plaintiffs  should never                      have  had  to  institute this  action  to                      enforce their clear right to purchase the                      disputed  securities   pursuant  to   The                      Agreement.  [FN17]7     Accordingly,  the                      Court rules that  Plaintiffs are entitled                      to  recover  their attorneys'  fees  from                      Defendants. . . .[FN18]8          Whitney Bros. Co., No. 90-054-S, 1992 WL 686272 at *7.            _________________                    We  must  first  analyze whether  our  reversal  on the          prepayment  issue significantly affects  the overall integrity of          the fee award.  The  order states that "the record overwhelmingly          indicates that Plaintiffs should never have had to institute this          action  to enforce  their clear  right  to purchase  the disputed          securities  pursuant to  The  Agreement."    It  enumerates  five          instances  of  alleged  bad   faith,  including  the  Defendants'                                        ____________________          7  Footnote 17 states: "At   minimum,   Defendants   could   have          accepted the December 13, 1990, Tender, which adopted Defendants'          purchase  price, and terminated this costly litigation."  Whitney                                                                    _______          Bros. Co., No. 90-054-S, 1992 WL 686272 at n.17.          _________          8  Footnote 18 states:                         The   Court's    decision   to    hold                      Defendants   responsible   for   all   of                      Plaintiffs' fees  in this  case has  been                      made with  due consideration of  the fact                      that  the  price issue  should  have been                      disposed   of   at    summary   judgment.                      However,  the Court's  ruling on  fees is                      necessarily  informed  by the  bad  faith                      Defendants   exhibited   throughout   the                      six-day trial.   In light  of Defendants'                      bad faith, the Court  finds that it would                      be patently unfair  to require Plaintiffs                      to pay any amount of  the attorneys' fees                      in this case.          Id. at n.18.          ___                                         -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  instances of  bad          faith are sufficient to support the fee award.                    We   begin  by  emphasizing  that  the  district  court          assessed the  fees pursuant  to the  court's "inherent  power" to          "manage [its] own affairs."  Link v. Wabash R. Co., 370 U.S. 626,                                       ____    _____________          630-31  (1962).   It is  beyond serious  dispute that  a district          court  may use  its  inherent powers  to  assess attorneys'  fees          against  a  party that  has  "'acted in  bad  faith, vexatiously,          wantonly, or for oppressive reasons,'"  Chambers, 501 U.S. at 45-                                                  ________          46 (quoting Alyeska  Pipeline Service Co. v.  Wilderness Society,                      _____________________________     __________________          421 U.S. 240,  258-59 (1975)); see also Roadway  Express, Inc. v.                                         ________ ______________________          Piper,  447  U.S.  752, 765-66  (1980)  (recognizing  "bad faith"          _____          exception to general  rule that federal courts  cannot ordinarily          make  fee-shifting awards); Jones v. Winnepesaukee Realty, et al,                                      _____    ___________________________          990 F.2d 1, 3 (1st  Cir. 1993)(citations omitted).  Nevertheless,          "[b]ecause  of  their  very  potency,  inherent  powers  must  be          exercised with restraint  and discretion."  Chambers, 501 U.S. at                                                      ________          44 (citation omitted).  Accordingly, a court's  inherent power to          shift attorneys'  fees "should be used sparingly and reserved for          egregious circumstances."  Jones, 990 F.2d  at 3.  Significantly,                                     _____                                        ____________________          9  As we noted above, the district court took this statement into          consideration by  reducing the fee  award to the extent  that the          fees were attributable to the prepayment issue.                                         -11-          we have held that a district court exercising its inherent powers          in  this  fashion  must  describe  the  bad  faith  conduct  with          "sufficient specificity," accompanied by  a "detailed explanation          of the reasons justifying the award."   See Gradmann & Holler  v.                                                  ___ _________________          Continental, 679 F.2d  272, 274 (1st Cir.   1982) (vacating   fee          ___________          award  for district  court's failure  to  provide a  sufficiently          detailed  justification)(citing F.D. Rich Co. v. United States ex                                          _____________    ________________          rel.  Industrial Lumber  Co., 417    U.S. 116,  129 (1974));  cf.          ____________________________                                  ___          Jones,  990  F.2d  at  3-4  (holding  that  the  district court's          _____          "specific,  meticulously  detailed  finding  of  bad  faith"  was          supportable on appeal).  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'  failure to advance expert  testimony in          support  of their  earlier insistence  that  the Plaintiffs  were          financially incapable  of performing.   We agree that  a district          court could find  bad faith where a party  maintains an unfounded          action or  defense without any  reasonable hope of  prevailing on          merits.    See  Chambers,  501  U.S. 32;  see  also  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  colorable).  Nevertheless,  the facts here are  not so          clear.    In   their  cross-motion  for  summary   judgment,  the          Defendants advanced eight grounds for resisting their obligations          under the Agreement.  The stated grounds  included the following:          (1)   Whitney  Brothers'  financial   condition  would  not  have          permitted  it to  make  the  installment  payments;  (2)  Whitney          Brothers' funds were restricted because its bank had liens on the          company's assets; and  (3) payment of the note  would be unlawful          because, under  New Hampshire  corporate law,  a corporation  can          repurchase  its  own  shares   only  with  unrestricted  surplus.          Although the district court's Summary Judgment Opinion holds that          none   of  the  stated  grounds  preclude  the  stock  repurchase          contemplated  by the  Agreement, neither  it  nor the  subsequent          order imposing  fees explains how these defenses are frivolous or          why they  were objectively  or subjectively  unreasonable at  the          time  they were advanced.   Cf. Blue  v. U.S. Dept.  of Army, 914                                      ___ ____     ___________________          F.2d  525,  544  (4th Cir.  1990)(finding  that  district court's          claim-by-claim  description  of  the  frivolous   nature  of  the          plaintiffs' complaint demonstrated clearly that their "widespread          charges  of  racial  discrimination  [were  leveled]  without any          regard for the truth . .  . in order to harass and  embarrass the          personnel at Fort Bragg").                    The  third and  fourth  instances  of  bad  faith  were          predicated on the  district court's  belief that  both David  and          Samuel  Sprafkin had  offered  testimony  that  "simply  was  not          credible."   We have  no doubt that  when a party  has materially                                         -13-          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  to a full  range of litigation  abuses);          see  also  Perichak, 715  F.2d  at  84-85 &  n.9  (3d Cir.  1983)          _________  ________          (holding  that  the  defendant's  "'materially  false  statements          [made] under  oath' are, having  been critical to the  success of          his  case, alone,  enough to  support a  finding of  bad faith");          Carri n  v.  Yeshiva University,  535  F.2d  722 (2d  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  v.  Pritikin,  787  F.2d  54,  58  (2d  Cir.                         ____      ________          1986)(discussing  fee awards under  the Copyright Act);  see also                                                                   ________          Blue, 914 F.2d  544 (noting that "not  every instance in which  a          ____          district court credits one side's  witnesses over another's is an          occasion for sanctions").                    Here,  the  district  court  merely  stated   that  the          Sprafkins' testimony,  "[i]n light of  all the  evidence in  this          case,  .  .  .  simply  was  not  credible."   It  set  forth  no          explanation for this conclusion.   We think that a district court          cannot  predicate  the use  of  its  inherent  powers on  a  mere          conclusory statement that the  witnesses were not credible.   Cf.                                                                        ___          Blue, 914 F.2d  at 544 (holding  that although the fee  award was          ____          assessed against  plaintiffs in a  complex civil rights  suit, it                                         -14-          was  proper  because  the district  court's  order  imposing fees          meticulously describes each  instance of perjury and  bad faith).          Because the  district court  neither explained  why it  concluded          that the Sprafkins had perjured themselves nor  explained why any          allegedly untrue statements were material, we cannot say that the          bad  faith conduct was described with "sufficient specificity" or          accompanied  by a "detailed explanation of the reasons justifying          the  award."    See Gradmann  &  Holler,  679 F.2d  at  274.   We                          ___ ___________________          therefore  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  its fifth finding of bad faith on          the  Defendants' endorsement of  the Schimmel appraisal.   In its          order, the  court found the  Schimmel appraisal to  be completely          lacking   in   factual  foundation,   adopting   the  Plaintiffs'          contention that "the trustees and their attorney found someone in          Mr. Schimmel  who would say  anything they wanted him  to say."10          The Order states  that the Defendants proceeded to  trial for the          sole purpose of advancing the Schimmel appraisal "despite [their]          acknowledged  duty as trustees to advance a competent appraisal."          The  record  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  court's   fee  order  adopted  in  toto  the                                                              ________          Plaintiffs' arguments  set forth  in their  Motion to  Strike the          Testimony of Alfred E. Schimmel.                                         -15-          was located in an "A-2  flood zone."11  The record  also supports          the  district court's  finding that  Schimmel neither  associated          with a "qualified  local appraiser" nor spent "sufficient time to          understand the  nuances of the  local market" as required  by the          Appraisal  Foundation's Standards  of  Professional Practice  and          Conduct.  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  of          bad faith  was well  grounded in  the record  and set  forth with          sufficient  particularity  and  is  accordingly  sustainable   on          appeal.                    The  district  court's  fee  order  indicated  that  it          predicated  the fee  award  on  the  cumulative  effect  of  five          specific instances of alleged bad  faith and its finding that the          "record  overwhelmingly indicates  that  Plaintiffs should  never          have had to institute this action to enforce their clear right to          purchase  the  disputed securities  pursuant  to  The Agreement."          Although  we affirm  the fifth  finding of  bad faith,  the First          Appeal obviated the second, and further examination of  the order          seriously  undermines the facial validity of the remaining three.          Moreover,   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  during periods of  heavy rain.   We think the  district          court  was  entitled to  find  that  this  data would  have  been          considered in any competent appraisal.                                         -16-          file  suit.   As we  noted  above, neither  the district  court's          Summary Judgment Opinion nor the Order explains why  the defenses          maintained  by the  Defendants were  objectively or  subjectively          unreasonable  when  asserted.   Perhaps  more  significantly, the          Defendants  ultimately   prevailed  on   the  prepayment   issue,          apparently vindicating their rejection of the Plaintiffs' initial          tenders.  This case  involves a complex set  of facts and  events          that occurred both in and out of court.  In the end, we think the          district  court's cursory  explanation of the  bases for  the fee          award is  simply inadequate,  particularly in  light of  the fact          that no hearing was held on the issue.                    We   remain   cognizant   of    the   Supreme   Court's          pronouncement that  appellate tribunals should  give deference to          the  district courts'  determinations on  sanctions  in order  to          "streamline  the litigation  process  by  freeing  the  appellate          courts from the duty of reweighing evidence . . . already weighed          and considered by  the district court."  Cooter  & Gell, 496 U.S.                                                   ______________          at 404.  In  the context of a  court's inherent powers,  however,          this  deference  is only  proper  where  the district  court  has          explained  its actions with  sufficient detail.   Accordingly, we          find that the  combined effect of our reversal  on the prepayment          issue  and the district  court's failure to  adequately set forth          its  justifications render its  imposition of attorneys'  fees an          abuse of discretion.   We therefore  vacate the district  court's          fee order and remand so that the district court can make specific          findings consistent with this opinion.                                         -17-                    Vacated.                    _______                                         -18-
