Nai v. National Asset Mortgage, LLC et al

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
CHECKS ACIEK ATENY NAI,
Plaintiff,
v.
NATIONAL ASSET MORTGAGE, LLC, et
al.,
Defendants.
____________________________/
Case No. 1:24-cv-666
HON. JANE M. BECKERING
MEMORANDUM OPINION AND ORDER
Plaintiff Checks Aciek Ateny Nai initiated this action by filing a Complaint alleging that
Defendants National Asset Mortgage, LLC (“NAM”); BAT Holdings Eight, LLC; Homi Holdings,
LLC; and US Home Rentals, LLC violated the Real Estate Settlement Procedures Act, 12 U.S.C.
§§ 2601–2617, and various state laws by “mismanage[ing] Plaintiff’s escrow account for the
subject property by failing to pay the required property taxes in a timely manner, which resulted
in Plaintiff being charged fees and penalties” (see Mem. Op. & Or., ECF No. 127 at PageID.779).
On February 25, 2026, the Court entered an Order to Show Cause as to “why sanctions
should not be imposed” for Defendant NAM’s “misrepresentation of the language of 12 U.S.C.
§ 2614 in both Defendant’s Brief in Support of its Motion for Summary Judgment (ECF No. 117
at PageID.642) and its Response in Opposition to Plaintiff’s Motion for Partial Summary Judgment
(ECF No. 132 at PageID.826)” (see OTSC, ECF No. 144, citing FED. R. CIV. P. 11). On March 6,
2026, Defendant NAM filed a response admitting that counsel had misrepresented the text of the
statute in both briefs (see OTSC Resp., ECF No. 146 at PageID.875). Defendant NAM’s quotation
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materially altered the statute’s plain meaning (see OTSC, ECF No. 144). Defendant NAM argues
that its counsel submitted the fabricated quotations as a result of “inadvertent error” and requests
permission to strike the relevant portions of the two briefs in question (see id. at PageID.877).
Federal Rule of Civil Procedure 11 requires lawyers or unrepresented parties to certify that
their “claims, defenses, and other legal contentions are warranted by existing law or by a
nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new
law.” FED. R. CIV. P. 11(b)(2)–(3). “If, after notice and a reasonable opportunity to respond, the
court determines that [Rule 11] has been violated, the court may . . . impose an appropriate sanction
upon the attorneys, law firm, or parties that have violated [Rule 11] or are responsible for the
violation.” FED. R. CIV. P. 11(c)(1). Whether to impose sanctions under “Rule 11 is a matter of
judicial discretion.” Linear Grp. Servs., LLC v. Attica Automation, Inc., No. 13-10108, 2014 WL
3400714, at *14 (E.D. Mich. July 11, 2014) (collecting federal authorities).
“[T]he test for imposition of Rule 11 sanctions is whether the [party]’s conduct was
reasonable under the circumstances.” Ridder v. City of Springfield, 109 F.3d 288, 293 (6th Cir.
1997). “Rule 11 sanctions may be imposed regardless of whether an error was made in good or
bad faith.” Seither & Cherry Quad Cities, Inc. v. Oakland Automation, LLC, No. 23-11310, 2025
WL 2105286, at *2 (E.D. Mich. July 28, 2025).1 “[T]here is no requirement that a full evidentiary
hearing be held before imposing sanctions. All that is required is that the party be given notice and
an opportunity to be heard.” 	DiPonio Const. Co. v. Int’l Union of Bricklayers & Allied
Craftworkers, Loc. 9, 687 F.3d 744, 752 (6th Cir. 2012) (cleaned up).
1 Accord Pittman v. Mich. Corr. Org., SEIU, Local 526, 123 F. App’x 637, 641 (6th Cir. 2005)
(“While he continues to maintain that these claims are not barred by res judicata, his subjective
belief will not prevent imposition of Rule 11 sanctions”); Tahfs v. Proctor, 316 F.3d 584, 594 (6th
Cir. 2003) (“A good faith belief in the merits of a case is insufficient to avoid sanctions”); Invst
Fin. Group v. Chem-Nuclear Sys., 815 F.2d 391, 401 (6th Cir. 1987) (same).
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Courts routinely impose Rule 11 sanctions for the submission of fabricated authority.2
The conduct at issue in this case is particularly troubling given that Plaintiff Nai alerted
Defendant NAM to the inaccuracy of its quotations months prior to the Court’s entry of the
Order to Show Cause (see Pl. Reply, ECF No. 137 at PageID.854, stating “NAM misstates the
accrual rule under 12 U.S.C. § 2614. The statute begins to run upon ‘the occurrence of the
violation,’ not the ‘first occurrence’, as stated in their brief.”). Defendant NAM nevertheless
failed to file a notice of supplemental authority, amend its submissions, or otherwise inform
the Court that it had misrepresented the text of the relevant statute. That was a grave mistake.
The Advisory Committee Notes applicable to Rule 11 indicate that the Court should
consider the following questions in determining whether to impose sanctions:
Whether the improper conduct was willful, or negligent; whether it was part of
a pattern of activity, or an isolated event; whether it infected the entire pleading,
or only one particular count or defense; whether the person has engaged in
similar conduct in other litigation; whether it was intended to injure; what effect
it had on the litigation process in time or expense; whether the responsible
person is trained in the law; what amount, given the financial resources of the
responsible person, is needed to deter that person from repetition in the same
case; what amount is needed to deter similar activity by other litigants.
See Rose v. Washington, No. 2:16-CV-00242, 2021 WL 3177307, at *2 (W.D. Mich. June 28,
2021), aff’d, No. 21-2764, 2023 WL 9316268 (6th Cir. Nov. 1, 2023). 	Here, Defendant NAM
does not appear to have engaged in a “pattern” of falsifying authority, although counsel is placed
on notice that any misrepresentation of applicable law in the future will not be viewed as an
2 See, e.g., Lothamer Tax Resolution v. Kimmel, Case No. 1:25-cv-579, ECF No. 184 (W.D. Mich.
December 1, 2025) (imposing Rule 11 sanctions to address “briefs . . . riddled with incorrect
citations”); United States v. Hayes, 763 F. Supp. 3d 1054, 1067 (E.D. Cal. 2025) (“Citing
nonexistent case law or misrepresenting the holdings of a case is making a false statement to a
court.”); Dehghani v. Castro, 782 F. Supp. 3d 1051, 1057 (D.N.M. 2025) (concluding that the
submission of fabricated authorities violates Rule 11); Ferris v. Amazon.com, 778 F. Supp. 3d 879,
881 (N.D. Miss. 2025) (“Mr. Ferris violated Rule 11 by submitting false citations to the Court—
first, in his complaint; then, after being put on notice by Defendant, in his subsequent filings.”).
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“isolated incident.” See id. As to whether Defendant NAM or its counsel have “engaged in similar
conduct in other litigation,” the Court has searched for the names “National Asset Mortgage” and
counsel “Matthew R. Reinhardt,” in combination with the word “sanction,” and the Court has not
identified other similar sanctions proceedings. 	See id. 	The Court notes that the fabricated
quotation—although material as to the applicable statute of limitations—did not “infect” the
remainder of Defendant NAM’s briefing. See id. The Court further notes that both parties offered
only a brief discussion of the statute of limitations, and thus Defendant NAM’s fabricated
quotation did not result in the expenditure of significant “time or expense” by the parties. See id.
That said, Defendant NAM and its counsel have rendered the question of whether to impose
sanctions a close one by failing to correct the quotations at issue even after Plaintiff Nai expressly
informed them that they had misrepresented controlling authority to the Court. The Court is also
mindful of the need to “deter” repetition of this conduct both “in the same case” and by “other
litigants.” See id. 	On balance—after careful consideration of the record, relevant authorities, and
Defendant NAM’s request to strike the citations at issue—the Court will consider the Order to
Show Cause satisfied and decline to impose sanctions under Rule 11.
Accordingly:
IT IS HEREBY ORDERED that the Order to Show Cause (ECF No. 144) has been
satisfied and the Court declines to impose sanctions under Federal Rule of Civil Procedure 11.
Dated: March 11, 2026 	/s/ Jane M. Beckering
JANE M. BECKERING
United States District Judge
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