Lupe Development Partners, LLC; Steven Minn v. Penny Baird Third Party

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 25-1566
___________________________
Lupe Development Partners, LLC; Steven Minn
Plaintiffs - Appellants
v.
Penny Baird
Third Party Defendant - Appellee
Dessins, LLC
Third Party Defendant
____________
Appeal from United States District Court
for the District of Minnesota
____________
Submitted: December 17, 2025
Filed: May 7, 2026
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Before LOKEN, SMITH, and KOBES, Circuit Judges.
____________
SMITH, Circuit Judge.
Plaintiffs Lupe Development Partners, LLC and Steven Minn (collectively,
“Plaintiffs”) sought to enforce judgments that they have against defendant Fred
Deutsch, the husband of third-party defendant Penny Baird. This case involves the

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unusual scenario of a judgment creditor seeking to depose its former legal counsel.
Plaintiffs moved for leave to depose the Scher Law Firm, LLP (Scher), as part of
their ongoing efforts to enforce the judgments against Deutsch. The proposed
deposition focused on Scher’s prior lawsuit against Baird and her children for
allegedly receiving fraudulent conveyances from Deutsch. Plaintiffs’ motion for
leave to depose Scher followed a prior order of the district court1 in which it
“cautioned” Plaintiffs “that no further discovery into Baird’s finances will be
permitted absent new evidence of fraudulent or voidable transactions.” R. Doc. 59,
at 19. The district court denied Plaintiffs’ motion for leave to depose Scher and held
Plaintiffs jointly and severally liable for Baird’s costs and fees in responding to
Plaintiffs’ motion. Plaintiffs appeal, arguing that the district court abused its
discretion in (1) denying their motion for leave to depose Scher and (2) imposing a
sanctions award against them. We affirm.
I. Background
This case arises from “nearly two decades of litigation history” and requires
substantial summarization of that history. R. Doc. 78, at 1. In 2007, Plaintiffs sued
Deutsch and his development companies in Minnesota state court, alleging contract
breaches in a real estate development project. The Minnesota state court dismissed
Baird as a defendant in that lawsuit after she established that she had not signed a
guaranty. In 2010, the Minnesota state court entered two judgments for Plaintiffs
against Deutsch and his companies totaling over $1.9 million (2010 Judgments).
In 2009, Scher, in its representative capacity for Plaintiffs and other claimants,
sued Baird and her children in New York state court “for accepting over $1,000,000
in fraudulent transfers from Deutsch and/or his business” (2009 Lawsuit). R. Doc.
68, at 2. The complaint alleged that “Deutsch fraudulently transferred over
$20,000,000, which were the proceeds of the sale of the Park Lex office building, to
a shell entity solely owned by Deutsch.” Id. It further alleged that “Deutsch used a
1 The Honorable Paul A. Magnuson, United States District Judge for the
District of Minnesota.

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portion of those fraudulently-received funds [through the shell entity] to purchase
extravagant ‘gifts’ for his family.” Id. at 3. Specifically, the complaint “alleged that
Baird accepted over a million dollars in fraudulent conveyances from Deutsch and/or
his business, as a ‘gift’ for the purchase of a Paris apartment.” Id. It also alleged that
Baird “received an opulent diamond ring valued in excess of $100,000 from the same
funds” and that her children “received diamonds valued in excess of $50,000 each,
from the fraudulently transferred funds.” Id. “The 2009 Lawsuit concluded with a
settlement agreement.” R. Doc. 78, at 2 (citing R. Doc. 41-1).
Plaintiffs also retained Scher to conduct post-judgment discovery against
Deutsch in New York state court. Scher’s goal was to uncover fraudulent
conveyances made from Deutsch to Baird and their children. In 2012, Plaintiffs,
through Scher, subpoenaed Baird, “seeking her bank statements and tax returns,
documents relating to a mortgage payment on a Paris apartment, and information
about three diamonds and a diamond ring.” R. Doc. 59, at 2. They additionally
subpoenaed TD Bank and JP Morgan Chase for “information about Baird’s personal
and business accounts.” Id. Baird moved to quash the subpoenas. In 2013, the New
York Supreme Court granted her motion, “finding that Plaintiffs ‘failed to establish
that the subpoenas seek information relevant to the identification of assets of the
judgment debtor that could be used to satisfy their claim.’” Id. (quoting R. Doc. 41-
1, at 248–49). Plaintiffs appealed, but the Appellate Division of the New York
Supreme Court affirmed. It held “that the information Plaintiffs sought from Baird
was ‘utterly irrelevant to any proper inquiry.’” Id. (quoting R. Doc. 41-1, at 252–
53). The New York Court of Appeals subsequently denied Plaintiffs’ application
seeking leave to appeal.
In 2015, Plaintiffs again retained Scher and filed suit in the New York
Supreme Court against Baird and her children for fraudulent conveyances involving
the Paris apartment, the three diamonds, and the diamond ring (2015 Lawsuit). The
suit was stayed after Plaintiffs and another creditor filed an involuntary bankruptcy
petition against Deutsch. Thereafter, the New York Supreme Court directed the
parties to appear for a status conference, but the bankruptcy trustee and Plaintiffs

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failed to appear. As a result, the court dismissed the fraudulent conveyances suit with
prejudice.
In the bankruptcy action, Plaintiffs retained Cozen O’Connor, P.C. (Cozen) to
file an adversary complaint against Deutsch, requesting that the bankruptcy court
declare nondischargeable the debts that Deutsch owed to Plaintiffs. In 2017, the
bankruptcy court held “that the award was nondischargeable and Deutsch would
remain liable to Plaintiffs for the damages awarded by the Minnesota court.” Id. at
3 (citing In re Deutsch, 575 B.R. 50 (Bankr. S.D.N.Y. 2017)).
Plaintiffs “then turned [their] efforts to pursuing Baird, or at least to pursuing
discovery from or about Baird’s finances, through [the] chapter 7 case.” R. Doc. 41-
1, at 4. In 2018, Cozen “appeared as special counsel” to the bankruptcy trustee. Id.
In 2019, Cozen, on the bankruptcy trustee’s behalf, subpoenaed Baird for “financial
information, documents, and records regarding any bank accounts owned by Baird
or her business between 2012 and 2019” and “information regarding the sale of the
Paris apartment and a list of all safe deposit boxes she maintained.” R. Doc. 59, at
3. Baird moved to quash the subpoena. The bankruptcy court denied Baird’s motion
and “permitted the trustee to conduct limited discovery and depose Baird.” Id. “But
the [c]ourt made clear, while permitting the discovery against Baird, that ‘this has
got to end.’” R. Doc. 41-1, at 5. The discovery “produced nearly 6,000 pages of
documents, including financial records and financial aid applications filed with her
children’s schools.” R. Doc. 59, at 3.
In 2021, Cozen, on the bankruptcy trustee’s behalf, issued 11 subpoenas
seeking “documents and information from 2006 through 2019 related to Baird’s
finances and those of her company, Dessins, LLC” and “information about her
children’s bank accounts and tuition payments made to schools they attended.” Id.
at 4. Baird moved to quash the subpoenas. This time, the bankruptcy court granted
the motion. It explained, “While efforts by the judgment creditors to recover their
claims are proper, their efforts to recover from Baird have ‘crossed the line.’” R.
Doc. 41-1, at 3. The bankruptcy court observed that counsel had not “uncover[ed]

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any evidence of avoidable transfers to, or improper conduct by, Baird.” Id.
According to the court, counsel was pursuing “‘follow up questions,’ nearly two
years after Baird’s deposition . . . without any new evidence or specific allegations
of wrongdoing or avoidable transactions.” Id. at 5–6. The court deemed counsel’s
conduct “to be totally unjustifiable harassment of Baird” and stated that “[i]t ends
now.” Id. at 6. It quashed the subpoenas in their entirety. Subsequently, the
bankruptcy court entered a discharge in the bankruptcy case. But because the court
had determined that the Minnesota state court’s damages award was
nondischargeable, Deutsch remained liable for Plaintiffs’ judgments.
In December 2021, Cozen filed on Plaintiffs’ behalf a complaint in federal
district court seeking recognition and enforcement of the 2010 judgments against
Deutsch and his companies. The district court granted Plaintiffs’ motion for default
judgment in May 2022, and the case was closed.
But in April 2023, Plaintiffs served several subpoenas in the district court case
“as part of their effort to locate [Deutsch’s] assets and collect on [the] judgment[s]
they were awarded against him in 2010.” R. Doc. 59, at 1. These subpoenas sought
from Baird and others “largely the same information from the same entities as the
subpoenas quashed by the New York Supreme Court in 2012 and the Bankruptcy
Court in 2021.” Id. at 5. Plaintiffs sought “information from the entire period from
2006 to 2023.” Id. at 18. Baird moved to quash 14 of the subpoenas. The magistrate
judge quashed ten and “significantly limited the scope of the remaining four for
information on Baird’s finances and the finances of her company.” (2023 Order). R.
Doc. 78, at 2 (citing R. Doc. 59). Importantly, the district court warned Plaintiffs’
counsel:
Plaintiffs are cautioned . . . that no further discovery into
Baird’s finances will be permitted absent new evidence of
fraudulent or voidable transactions. They have subjected
Baird to multiple lawsuits and third-party subpoenas over
the last thirteen years, and in that time, they have
uncovered scant evidence of any suspicious activity.

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[R. Doc. 59, at] 19. The purpose of the warning was to put a stop to the
endless pursuit of Baird.
Id. (ellipsis in original).
In June 2024, Plaintiffs filed a “Motion for Leave to Conduct Deposition of
the Scher Law Firm, LLP” as part of their continued effort to enforce the 2010
judgments. The motion was filed pursuant to Federal Rules of Civil Procedure 69
and 30. “Plaintiffs assert[ed] that a deposition of the Scher firm . . . [would] provide
. . . new evidence” “of fraudulent or voidable transactions.” R. Doc. 68, at 2 (quoting
R. Doc. 59, at 19). Plaintiffs’ proposed deposition focused on the 2009 Lawsuit.
Plaintiffs informed the court of their belief that
the Scher firm has information relevant to their investigations into the
transfers described in the [2009] action, information related to their
financial investigation and tracing of the remaining approximately
$19,000,000 in sale proceeds that has not been accounted for by
Deutsch, as well as information relevant to other suspicious
transactions they identified between Deutsch and/or his businesses that
were uncovered in pursuit of those claims.
Id. at 3 (footnote omitted). Plaintiffs maintained that they did not receive this
information “in the prior 2004 examinations of Deutsch and Baird, and [that] the
Scher Firm is the sole source of this information.” Id. According to Plaintiffs, “this
information [was] key to demonstrating to [the district court] that there are, and have
been, suspicious transactions between Deutsch and Baird that require further
investigation.” Id.
A copy of the proposed subpoena to depose Scher was attached to the motion
for leave. If issued, the subpoena would have required Scher to “bring . . . to the
deposition the following documents. . . : See Attached Exhibit A.” R. Doc. 68, at 8.
In turn, “Exhibit A” provides:

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REQUEST NO. 1: Produce copies of all documents, records, or
electronic data, related to the action entitled The Scher Law Firm, LLP
v. Penny Baird, et. al., No. 23821/09 (N.Y.S.C. Kings County),
including but not limited to communications, memoranda, or written
materials related to the development and pursuit of claims against
Penny Baird, Alexander Deutsch, Benjamin Deutsch, and Philip
Deutsch.
REQUEST NO. 2: Produce copies of all documents, records, or
electronic data, related to any action in which you were involved
relating to the recovery of funds or assets in which it was alleged that
there were fraudulent or voidable transactions between Fred Deutsch,
including any business or entity in which he maintained an interest, on
the one hand, and Penny Baird, including any business or entity in
which she maintained an interest, or any of Fred Deutsch or Penny
Baird’s children, on the other.
R. Doc. 68, at 11 (bold and underline omitted). Baird opposed the motion, requesting
that the court impose sanctions on Plaintiffs for seeking discovery “directly contrary
to th[e] [c]ourt’s prior order.” R. Doc. 74, at 6.
The magistrate judge denied the motion for leave and imposed “limited
sanctions in the form of Baird’s costs and fees in responding to the motion.” R. Doc.
82, at 2. The magistrate judge concluded that “subpoenas seeking information on
Baird’s transactions is discovery related to her finances.” R. Doc. 78, at 3 (citing R.
Doc. 59; R. Doc. 40). Specifically, Plaintiffs sought “discovery on the 2009 Lawsuit,
which alleged Baird and her children accepted three fraudulent transfers from
Deut[s]ch” and “discovery on ‘any action’ the Scher Firm was involved with that
alleged ‘fraudulent or voidable transactions’ between Deut[s]ch and Baird or their
children.” Id. The magistrate judge concluded that the request to obtain this
discovery failed for two primary reasons. “First, the discovery is, as defined in the
prior [2023] [O]rder, discovery into Baird’s finances.” Id. at 4. The 2023 Order
required Plaintiffs “to produce evidence of fraudulent or voidable activity before
seeking further discovery of Baird’s finances.” Id. Notably, Plaintiffs conceded that
they lacked any “new evidence of fraudulent or voidable transactions.” Id. “Second,”

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the magistrate judge noted that “Plaintiffs were almost certainly aware of this
discovery for years, which raises a question about why they have not sought it
sooner.” Id. Plaintiffs’ prior client relationship with Scher would likely have made
them aware of the information that they sought. Plaintiffs “retained Scher Firm to
represent them in [the 2015] suit against Baird” for fraudulent conveyances after
“the Scher Firm [had] sued Baird seeking recovery based on the alleged conveyances
[in the 2009 Lawsuit].” Id. at 5. The magistrate judge reasoned, “If Plaintiffs had a
legitimate reason to seek discovery from the 2009 Lawsuit, they should have done
so much earlier in the decade that has passed since filing the 2015 action.” Id. The
magistrate judge opined that Plaintiffs’ “decision to do so now after so much time
and expense and in light of the [c]ourt’s prior order borders on harassment.” Id.
The magistrate judge also imposed sanctions pursuant to its inherent authority.
It concluded that Plaintiffs “willfully disobeyed the prior order,” which “expressly
required Plaintiffs to produce new evidence of fraudulent or voidable transactions to
pursue further discovery of Baird’s finances.” Id. at 6. The magistrate judge found
that Plaintiffs did not “submit[] new evidence under the good-faith belief it would
warrant reopening discovery” but instead “admitted they lacked new evidence, and
nonetheless pursued information on Baird’s finances.” Id. The magistrate judge
noted “Plaintiffs’ continual disregard for court warnings not to mistreat Baird” and
deemed sanctions appropriate “as a penalty for failing to comply with a court order
and a deterrent of further unwarranted discovery into Baird’s finances.” Id. The
magistrate judge awarded Baird “her costs and fees in responding to Plaintiffs’
motion.” Id.
Plaintiffs objected to the magistrate judge’s order, “contending that their
motion proposing a subpoena to obtain information from a third party regarding
Baird’s finances does not violate the [c]ourt’s [2023] Order” and that “the Scher
Firm’s deposition may potentially reveal [new] evidence of fraud.” R. Doc. 82, at 2–
3. The district court overruled the objections and affirmed the magistrate judge’s
decision. It found that Plaintiffs alleged no new evidence to justify additional
discovery into Baird’s finances in contravention of the prior order. It also rejected

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Plaintiffs’ argument that “they demonstrated a special effort to comply with the
[c]ourt’s [2023] Order” by “filing a motion seeking permission to subpoena the law
firm.” Id. at 3. The court explained that Plaintiffs’ request that the court “deviate
from its previous decision does not evince the vigilance that Plaintiffs claim to
display.” Id. Finally, the district court upheld the magistrate judge’s imposition of
limited sanctions as an admonishment for “Plaintiffs’ unrelenting tactics to obtain
information regarding Baird’s finances.” Id.
II. Discussion
On appeal, Plaintiffs argue that the district court abused its discretion by (1)
denying their motion for leave to depose Scher and (2) imposing sanctions in the
form of attorneys’ fees against them.2
2 We are satisfied that we have appellate jurisdiction in this case. See, e.g.,
Cent. States, Se. & Sw. Areas Pension Fund v. Express Freight Lines, Inc., 971 F.2d
5, 6 (7th Cir. 1992) (“The general rule . . . is that interlocutory orders are not
appealable till the end of the case. The rule bars appeals from pretrial discovery
orders, but what about postjudgment discovery orders? An order denying such
discovery is appealable because no other route for obtaining appellate review of the
order is available. Contempt is not an option; there is no way to disobey an order
that merely denies your request for some relief.” (citation modified)); United States
v. Campbell, 73 F. App’x 382, 383 (10th Cir. 2003) (unpublished per curiam)
(“[T]he denial of a post-judgment motion to compel discovery under Rule 69(a) has
been held to be an immediately-appealable final order . . . .”); 10B Fed. Proc., L. Ed.
§ 26:896 (“A judgment creditor may appeal from the denial of postjudgment
discovery in aid of execution; thus, an order denying a motion to compel answers to
written interrogatories propounded under Fed. R. Civ. P. 69(a) and relating to the
financial resources of judgment debtors may be an appealable final decision under
28 U.S.C.A. § 1291.” (footnote omitted)); 2 Fed. Proc., L. Ed. § 3:195 (“Most
postjudgment orders are final decisions and are appealable as long as the district
court has completely disposed of the matter, since if such orders were not found
final, there is little prospect that further proceedings would occur to make them final.
A postjudgment order that addresses all the issues raised in the motion that sparked
the postjudgment proceedings is treated as final and appealable.” (footnotes
omitted)).

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A. Motion for Leave to Depose Scher
Plaintiffs assert that the district court abused its discretion by denying their
motion for leave to depose Scher because the requested discovery did not violate the
2023 Order. Additionally, they maintain that the district court “independently abused
its discretion in denying” their requested discovery because it was “within the broad
scope of discovery allowed by Federal Rules of Civil Procedure 26(b)(1) and
69(a)(2).” Appellants’ Br. 16.
We review for an abuse of discretion the district court’s denial of Plaintiffs’
motion for leave to depose Scher. See Credit Lyonnais, S.A. v. SGC Int’l, Inc., 160
F.3d 428, 430 (8th Cir. 1998). “The right to conduct discovery applies both before
and after judgment.” Id. Under Federal Rule of Civil Procedure 69(a), “[i]n aid of
the judgment or execution [of a money judgment], [a] judgment creditor . . . may
obtain discovery from any person—including the judgment debtor—as provided in
Additionally, although neither party has discussed whether Baird, as a third-
party defendant, has standing to challenge Plaintiffs’ motion for leave to depose
Scher, a nonparty, we conclude that she does.
Rule 26(c) provides that “[a] party or any person from whom discovery
is sought may move for a protective order in the court where the action
is pending.” Fed. R. Civ. P. 26(c)(1). The Rule also provides the [c]ourt
with the authority to issue “for good cause . . . an order to protect a party
or person from annoyance, embarrassment, oppression, or undue
burden or expense.” Id. “The explicit mention of ‘a party’ in the rule
has been interpreted to provide standing for a party to contest discovery
sought from third-parties.” Underwood v. Riverview of Ann Arbor, No.
08–CV–11024, 2008 WL 5235992, at *2 (E.D. Mich. Dec. 15, 2008);
see also Fleet Bus. Credit Corp. v. Hill City Oil Co., No. 01–2417, 2002
WL 1483879, at *2 (W.D. Tenn. June 26, 2002) (“Many district courts
have acknowledged [Rule 26(c)] allows a party to file a motion for
protective order on behalf of a non-party.”).
Shukh v. Seagate Tech. LLC, 295 F.R.D. 228, 236 (D. Minn. 2013) (emphases added)
(first and third alterations and ellipsis in original).

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these rules or by the procedure of the state where the court is located.” In turn,
Federal Rule of Civil Procedure 26(b)(1) provides that
[p]arties may obtain discovery regarding any nonprivileged matter that
is relevant to any party’s claim or defense and proportional to the needs
of the case, considering the importance of the issues at stake in the
action, the amount in controversy, the parties’ relative access to
relevant information, the parties’ resources, the importance of the
discovery in resolving the issues, and whether the burden or expense of
the proposed discovery outweighs its likely benefit. Information within
this scope of discovery need not be admissible in evidence to be
discoverable.
However, a court is required to limit the “extent of discovery . . . if it
determines” one of the following:
(i) the discovery sought is unreasonably cumulative or duplicative, or
can be obtained from some other source that is more convenient, less
burdensome, or less expensive;
(ii) the party seeking discovery has had ample opportunity to obtain the
information by discovery in the action; or
(iii) the proposed discovery is outside the scope permitted by Rule
26(b)(1).
Fed. R. Civ. P. 26(b)(2)(C).
The district court’s 2023 Order “cautioned” Plaintiffs that “no further
discovery into Baird’s finances will be permitted absent new evidence of fraudulent
or voidable transactions.” R. Doc. 59, at 19 (emphasis added). Plaintiffs chose not
to appeal this order. The question, therefore, is whether Plaintiffs’ proposed
discovery was “into Baird’s finances.” If so, then the district court’s denial of
Plaintiffs’ motion for leave to depose Scher would not constitute an abuse of its
discretion.

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In their “Memorandum of Law in Support of Plaintiff’s Motion for Leave to
Conduct Deposition of the Scher Law Firm, LLP,” Plaintiffs sought discovery of the
2009 Lawsuit. That lawsuit alleged that Baird and her children accepted three
fraudulent transfers from Deutsch. See R. Doc. 68, at 2 (“[T]he Scher Firm, in its
representative capacity, sued Deutsch’s wife, Baird, and her children, for accepting
over $1,000,000 in fraudulent transfers from Deutsch and/or his business.”).
Plaintiffs expressly stated in their memorandum that they seek “information” related
to Scher’s “investigations into the transfers described” in the 2009 Lawsuit, as well
as “information related to [its] financial investigation and tracing of the remaining
approximately $19,000,000 in sale proceeds.” Id. at 3 (emphases added). Plaintiffs
sought discovery “relating to the recovery of funds or assets in which it was alleged
that there were fraudulent or voidable transactions between Fred Deutsch . . . and
Penny Baird, including any business or entity in which she maintained an interest,
or any of Fred Deutsch or Penny Baird’s children.” Id. at 11 (emphases added).
Scher’s financial investigation of alleged fraudulent transfers between
Deutsch and Baird concerns “Baird’s finances”—i.e., information about Baird’s
money. The 2023 Order prohibited all discovery of Baird’s finances absent “new
evidence of fraudulent or voidable transactions.” R. Doc. 59, at 19. Plaintiffs
conceded in their memorandum that they lacked “new evidence” and instead sought
discovery to obtain such evidence. R. Doc. 68, at 2 (“Plaintiffs assert that a
deposition of the Scher firm, for which Plaintiffs now request leave to conduct, will
provide exactly that new evidence.”). The 2023 Order prohibited discovery into
Baird’s finances absent new evidence. Plaintiffs presented no new evidence. The
district court did not abuse its discretion by denying Plaintiffs’ motion for leave to
depose Scher in the absence of new evidence of fraudulent transactions.3
3 Even if the 2023 Order did not prohibit the proposed discovery, the district
court did not abuse its discretion in denying the motion under Rule 26(b)(2)(C). See
R. Doc. 78, at 5 (“If Plaintiffs had a legitimate reason to seek discovery from the
2009 Lawsuit, they should have done so much earlier in the decade that has passed
since filing the 2015 action. Their decision to do so now after so much time and
expense and in light of the Court’s prior order borders on harassment.”).

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B. Sanctions
Plaintiffs also challenge that the district court’s imposition of sanctions in the
form of costs and attorneys’ fees.
The district court relied on its inherent authority to impose costs and attorney’s
fees as a sanction. See R. Doc. 78, at 5. “Because of their very potency, inherent
powers must be exercised with restraint and discretion. A primary aspect of that
discretion is the ability to fashion an appropriate sanction for conduct which abuses
the judicial process.” Schafly v. Eagle F., 970 F.3d 924, 936–37 (8th Cir. 2020)
(quoting Chambers v. NASCO, Inc., 501 U.S. 32, 44–45 (1991)). “We review a
court’s imposition of sanctions under its inherent power for abuse of discretion.” Id.
at 936 (quoting Chambers, 501 U.S. at 55).
“‘[U]ndoubtedly within a court’s inherent power’ is ‘the less severe sanction
of an assessment of attorney’s fees.’” Id. at 937 (alteration in original) (quoting
Chambers, 501 U.S. at 45). “The court has inherent power to assess attorneys’ fees
as a sanction for willful disobedience of a court order.” Greiner v. City of Champlin,
152 F.3d 787, 790 (8th Cir. 1998) (citing Chambers, 501 U.S. at 45). And “a court
may assess attorney’s fees when a party has acted in bad faith, vexatiously,
wantonly, or for oppressive reasons.” Schlafly, 970 F.3d at 937 (quoting Chambers,
501 U.S. at 45–46). “A remedial award of attorney’s fees as a sanction occurs when
the fee is paid to the opposing party as compensation for the attorney’s fees incurred
as a direct result of the unethical behavior.” Id. (citation modified). “A court must,
of course, exercise caution in invoking its inherent power, and it must comply with
the mandates of due process, both in determining that the requisite bad faith exists
and in assessing fees.” Chambers, 501 U.S. at 50.
Plaintiffs argue that they did not violate the district court’s prior order because
they filed a motion seeking leave to conduct discovery “in an attempt to comply with
the [d]istrict [c]ourt’s [2023] Order.” Appellants’ Br. 17. They note that their motion
for leave to conduct discovery

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was filed before any discovery from the Scher Firm was actually
undertaken precisely because of the issuance of the [d]istrict [c]ourt’s
[2023] Order limiting discovery into “Baird’s finances.” Indeed,
exactly because [Plaintiffs] were mindful of the language contained in
the [2023] Order, and to ensure compliance with the [2023] Order,
[Plaintiffs] decided to seek leave to conduct the discovery before they
actually issued any subpoena to the Scher Firm (despite [Plaintiffs]’
belief that the information sought was allowable).
Id. at 19.
Baird counters that Plaintiffs’ “motion violated the clear implication and
intent of the December 2023 Order” because “[a]lthough . . . phrased in terms of
what the district court would not permit . . . it clearly implied a prohibition on
[Plaintiffs]: [Plaintiffs] must not pursue any further discovery into Baird’s finances
absent new evidence of fraudulent or voidable transactions.” Appellee’s Br. 19–20.
Baird maintains that Plaintiffs’ motion for leave “pursued further discovery into
Baird’s finances” and “forced Baird to respond to their motion, imposing on her one
of the burdens that the December 2023 Order was intended to prevent.” Id. at 20.
We hold that the district court did not abuse its discretion in imposing
sanctions under its inherent authority. Plaintiffs asked for permission to do what the
2023 Order expressly prohibited them from doing—seeking discovery of Baird’s
finances in the absence of new evidence. The district court did not ignore “the nearly
two decades of litigation history.” R. Doc. 78, at 1. Plaintiffs showed “continual
disregard for court warnings not to mistreat Baird.” Id. at 6. The court concluded
that Plaintiffs did not act in good faith in filing their motion for leave to subpoena
Scher because they “admitted they lacked new evidence, and nonetheless pursued
information on Baird’s finances.” Id. The court also noted Plaintiffs’ disregard of
“orders and admonitions” about Plaintiffs’ treatment of Baird. Id. The court’s
imposition of sanctions was permissible given Plaintiffs’ disobedience of the 2023
Order and the court’s finding that sanctions would deter Plaintiffs from “further
unwarranted discovery into Baird’s finances.” Id.

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III. Conclusion
Accordingly, we affirm the judgment of the district court.
______________________________

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