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HSBC Bank USA, N.A. v. Flamingo 316, LLC

United States District Court, D. Nevada

June 4, 2019

HSBC BANK USA, N.A., Plaintiffs,
v.
FLAMINGO 316, LLC, et al., Defendants.

          ORDER

          Nancy J. Koppe United States Magistrate Judge.

         Judges prefer not to spend their time lecturing and cajoling violating attorneys into compliance through the imposition of sanctions. Dela Rosa v. Scottsdale Mem. Health Sys., Inc., 136 F.3d 1241, 1244 (9th Cir. 1998). Unfortunately, the egregious misconduct of attorney Luis Ayon requires the expenditure of that time in this case. Pending before the Court is an order for Mr. Ayon to show cause why he should not be sanctioned. Docket No. 70.[1] For the reasons explained below, the Court SANCTIONS Mr. Ayon in the amount of $1, 000 in attorneys' fees and in a $3, 000 fine payable to the Clerk. The Court also REFERS Mr. Ayon to the Nevada State Bar for potential discipline for his ethical lapses.

         I. FACTUAL BACKGROUND

         Mr. Ayon represented in this case two individually-named Defendants (Tom Dadon and Daniela Dadon) (hereinafter “Tom” and “Daniela”) and several corporate defendants (Flamingo 316, Dadon Condos, and Meridian Resorts LLC 220 E Flamingo Unit 316 Series). United States District Judge Jennifer A. Dorsey ordered that a mandatory settlement conference be held. Docket No. 60. On March 27, 2019, the undersigned issued an order setting that settlement conference for May 9, 2019. Docket No. 61. The Court outlined therein the requirements for the settlement conference, including that “[a]ll individual parties” must personally appear unless a motion for an exception was filed and granted. Id. at 1-2. The deadline to seek an exception to the attendance requirements was set for April 3, 2019. See Id. at 2. The Court also required the submission of a settlement statement by May 2, 2019, that included identification of “[t]he names of the people who will attend the settlement conference.” Id.

         No request for an exception to the settlement conference attendance requirements was filed by Mr. Ayon for any of his clients. Mr. Ayon violated the order to submit a settlement statement by May 2, 2019, resulting in the issuance of an order requiring that he do so by May 6, 2019. Docket No. 64. In the untimely settlement statement that was signed by Mr. Ayon on May 6, 2019, he represents as follows:

1. Names of People Attending the Settlement Conference
Shaul Dadon, Tom Dadon, Daniela Dadon, and Itay Dadon are defendants in this matter and have full settlement authority. Luis A. Ayon, Esq. is lead counsel for Flamingo 316, LLC, Dadon Condos, LLC, Tom Dadon, as Trustee of T&D Nevada Trust, Meridian LLC and Flamingo East Flamingo Unit 316 Series and will be attending the settlement conference.

Settlement Statement at 1-2 (emphasis in original). Although this section is written (intentionally or otherwise) with some imprecision, its import is that Mr. Ayon would be attending the settlement conference with Tom, Daniela, Shaul Dadon, and Itay Dadon.

         On May 7, 2019, Plaintiff filed a stipulation to reschedule the settlement conference because of an unforeseen personal conflict for its corporate representative. Docket No. 65. The Court held a telephonic hearing that afternoon and determined that the settlement conference would proceed as scheduled. See Docket No. 67. At no time during that hearing did Mr. Ayon request a continuance of the settlement conference because of his own clients' inability to attend. See Hearing Rec. (05/07/2019).[2]

         When the settlement conference convened at 9:00 a.m. on May 9, 2019, Mr. Ayon appeared with only Itay Dadon. See Docket No. 69. The Court ordered that Tom and Daniela appear within 20 minutes, but Mr. Ayon represented that compliance was impossible because they were in Israel. Mr. Ayon further represented that he had only just become aware of that fact, and specifically represented that he did not know of their inability to attend when the Court held the above telephonic hearing on May 7, 2019. Mr. Ayon asked the Court to proceed with the settlement conference anyway, as he thought settlement could be achieved with participation of only Itay Dadon.[3] Given the non-compliance with its order, however, the Court vacated the settlement conference.

         The Court then reviewed the recording of the telephonic hearing from May 7, 2019. During a recess that was nonetheless recorded, Mr. Ayon had discussed with another attorney his clients' non-attendance at the then-imminent settlement conference: “Yeah, I think my clients should be fine. I don't know if I can get everyone there, though, but I'll have someone with settlement authority.” Hearing Rec. (05/07/2019) at 3:11 p.m. (emphasis added). Quite obviously and contrary to his later representation, Mr. Ayon did indeed have reason to believe during this hearing that not all of his clients would be appearing as had been ordered, but he did not seek relief from the Court.

         These circumstances are problematic standing on their own. They are even more concerning given the fact that the Court admonished Mr. Ayon only a few months earlier for very similar conduct in another case. See Bank of N.Y. Mellon v. Painted Desert Community Assoc., No. 2:17-cv-01466-JCM-NJK, Docket No. 64 (D. Nev. Nov. 13, 2018). In that case, Mr. Ayon's settlement statement was unclear as to whether all individual defendants he represented would be appearing at the Court-ordered settlement conference, so the Court issued an order reiterating that all individual parties were required to appear. See Painted Desert, Docket No. 58. Mr. Ayon responded by filing an untimely request for one of his clients to be excused from appearing, supported by his declaration that he had “inadvertently failed to file this motion earlier due to the fact that counsel never dealt with [his absent client].” See Painted Desert, Docket Nos. 59, 60. The Court noted the deficiencies with the request, including that it was filed the night before the settlement conference and effectively granted the relief being sought because the client was not in Nevada, but the Court allowed Mr. Ayon's client to appear telephonically so that the settlement conference could proceed. See Painted Desert, Docket No. 61. The Court did not condone that behavior, however, and left no doubt that similar behavior would not be tolerated in the future:

The Court issues this order separately to ADMONISH attorney Luis Ayon and [his client] for violating a clear Court order. Rather than seeking an exception to the Court's attendance requirements by filing a timely request, Mr. Ayon and [his client] ignored those requirements and effectively provided [his client] the relief she sought by seeking relief at the last minute. FAILURE TO COMPLY WITH COURT ORDERS IN THE FUTURE MAY RESULT IN THE IMPOSITION OF SANCTIONS.

Painted Desert, Docket No. 64 at 1 (emphasis in original). Despite that warning, Mr. Ayon has not corrected ...


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