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Tangwall v. Wacker

United States District Court, D. Montana, Billings Division

September 30, 2019

DONALD TANGWALL, individually in his capacity as a Trustee of the TONI1 TRUST, Plaintiff,


          SUSAN P. WATTERS United States District Judge

         United States Magistrate Judge Cavan filed Findings and Recommendations on August 12, 2019. (Doc. 19.) The Magistrate recommended the Court dismiss the action pursuant to L.R. 83.8. (Doc. 19 at 4.) Donald Tangwall timely filed objections to the findings and recommendations. (Doc. 20.)

         When a party timely objects to any portion of the Magistrate's Findings and Recommendations, the Court must review those portions of the Findings and Recommendations de novo. 28 U.S.C. § 636(b)(1); McDonnell Douglas Corp. v. Commodore Business Machines, 656 F.2d 1309, 1313 (9th Cir. 1981). "A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge may also receive further evidence or recommit the matter to the magistrate judge with instructions." 28 U.S.C. § 636(b)(1). The Court does not need to review the factual and legal conclusions to which the parties do not object. United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003).

         I. Background

         Tangwall makes no objection to the Magistrate's findings of fact. They are not clearly erroneous, and the Court adopts them in full. See (Doc. 19 at 1-3). In short, the Magistrate found the instant dispute is one of several lawsuits Tangwall has filed regarding a Montana state district court's judgment in favor of the Wackers. The district court found members of Tangwall's family had fraudulently transferred a ranch to an entity called the Toni 1 Trust ("Trust"), and the court rescinded the transfer. (Doc. 19 at 1-3.)

         Seemingly believing this Court maintains appellate jurisdiction over the matter, Tangwall filed a pro se complaint on behalf of the Trust asking this Court to reverse the state district court's judgment. (Doc. 2.) Shortly thereafter, the Wackers filed a motion to declare Donald A. Tangwall a vexatious litigant. (Doc. 9). Judge Cavan recommended resolving the case on the fact that Tangwall cannot represent the Trust pro se and denying as moot the Wackers' motion to declare Tangwall a vexatious litigant. But having reviewed the Wacker's brief in support of declaring Tangwall a vexatious litigant, the Court finds the issue merits a closer look.

         For at least thirty years, Tangwall has filed frivolous lawsuits across the United States, and courts have repeatedly taken issue with his meritless and frivolous arguments. At least four have declared him a vexatious litigant. His lawsuits include the following cases from Illinois, Tennesee, Michigan, and the Northern Mariana Islands:


Description of case

References to Tangwall

Tangwall v. First State Bank of Princeton, 1987 WL 16129, at *2(N.D. Ill. Mar. 11, 1987)

Tangwall brought a pro se complaint as a trustee on behalf of a trust. The court dismissed the case and granted Tangwall the opportunity to find an attorney and amend his complaint.

"A trustee is not a proper pro se plaintiff A trustee may not properly risk trust funds on his own untutored legal skills. Moreover, pro se plaintiffs place a particular burden on the court as the court must evaluate difficult complaints without any substantial benefit of an advocate. In this action the completely unhelpful response to the motion to dismiss is a case in point."

People v. Tangwall, 526 N.E.2d649, 651(Ill.App.2dDist. 1988)

Tangwall appealed a conviction for eavesdropping where he had surreptitiously recorded a conversation between a prosecutor and a state court judge.______

"[Tangwall's] arguments are, for the most part, incoherent, with numerous citations to cases entirely irrelevant to the issues at hand."

Lazy 'L' Fam. Preservation Tr. v. First State Bank of Princeton, 521N.E.2d.198, 200(Ill.App.2dDist. 1988)

Tangwall brought the same suit as Tangwall v. First State Bank of Princeton, in state court as a, pro se trustee on behalf of a trust. After having his case dismissed for substantially the same reasons, he appealed. The appellate court dismissed his appeal because he lacked authority to represent the trust.

Tangwall's appellate brief "consists of one paragraph of argument, and does not include any citations to case authority or statute in support of [his] argument...."

Tangwall v. Dougherty, 1991 WL 408005, at *2 (D.N. Mar. Is. May 10, 1991)

Tangwall brought a pro se action as a trustee on behalf of the WED Family Preservation Trust to attack a judgment from a Michigan state court concerning Michigan real property.

"Not only has [Tangwall] failed to make a prima facie showing of personal jurisdiction over defendants, he has failed to make any connection whatsoever between the defendants and the Northern Mariana Islands."___

In re Owners Fam. Preservation Tr., 1991 WL 408009, at *2 (D.N. Mar. Is. May 13, 1991)

The day after Tangwall filed a Chapter 11 petition for bankruptcy on behalf of a trust, the court dismissed it.

The case was "part of an ongoing saga which .. . resulted in a U.S. District Court affirming a Bankruptcy Court default judgment for fraudulent property transfer."

"In the totality of the circumstances this would be suggestive of bad faith and vexatious litigation ...."___

Tangwall v. Stapleton, 2002 WL 1723692, at *2 (Tenn.App. July 25, 2002)

The appellate court assessed the cost of appeal to Tangwall after he filed for bankruptcy and filed a subsequent, meritless lawsuit.

Tangwall "had no evidence that the [defendants] had done anything wrong in this matter, but... he just thought they knew more than they were telling him."_____

Tangwall v. Jablonski, 111 Fed.Appx.365, 367-68 (6th Cir. 2004)

After Tangwall settled a lawsuit with another party, Tangwall sued the same party again on the same issues through a legal entity, Tang-Tang Marketing. The 6th Circuit affirmed the district court's dismissal of the case.

"We have serious doubts as to whether Tang-Tang Marketing exists as a separate entity from Tangwall himself, or that the alleged assignment of rights ever took place .. . ."

Tangwall v. Looby, 109 F.App'x 12, 15 (6th Cir. 2004)

Tangwall, as a trustee, claimed to be the beneficiary of a trust (BFPT). Other trustees claimed Tangwall was stealing from BFPT and removed him. Nine days later, Tangwall filed for bankruptcy and claimed his purported interest in BFPT as an asset. Tangwall, the bankruptcy trustee, and BFPT agreed to a global settlement agreement. Tangwall, however, sued BFPT under new legal theories. The 6th Circuit dismissed his suit because of 1 judicial estoppel.____

"Tangwall has been anything but 'frank and fair' in his dealings with the judicial system. This lawsuit contravenes the settlement agreement that he signed ...."

"Tangwall cannot now assert a contradictory legal theory to prolong this litigation and extract more funds from the I defendants personally or from the BFPT. The doctrine of judicial estoppel is designed to forestall precisely this kind of ploy."

Huebner v. Tangwall, 2006 WL 2238960, at *1 (M.D. tenn. Aug. 4, 2006) [hereinafter "Huebner F]

The court declared void ab initio several entities Tangwall fraudulently formed and awarded nearly $2.5 million in compensatory and punitive damages against him.

"The record establishes that defendant Tangwall's statement in his objection document that he was 'not noticed of the hearing' is misleading at best and a blatant falsehood at worst."____

         Tangwall's significant litigation also includes:

• In re Dalby, 956 F.2d 268 (6th Cir. 1992) (consolidated appeal from four separate district court orders affirming entries of default judgment against Tangwall-related trusts to avoid fraudulent conveyances);
Tangwall v. Robb, 2003 WL 23142190 (E.D. Mich. Dec. 23, 2003) (dismissing the case with prejudice after Tangwall filed a malpractice action against his attorneys, missed the expert disclosure deadline, and filed a motion for the court to appoint an expert for him);
Huebner v. Tangwall, 2007 WL 2725244 (M.D. Tenn. Sept. 17, 2007) [hereinafter "Huebner IF] (holding Tangwall failed to meet the filing deadline for a Rule 60 motion after Huebner I and failed to give any explanation for why he failed to appeal the order and "for delaying an entire year before filing a motion to set aside an order awarding damages approaching $3 million").

         While not an exhaustive list of Tangwall's extensive litigation history, the above cases are easily identifiable illustrations of Tangwall's pattern of vexatious pro se litigation. Moreover, Tangwall is no stranger to being declared a vexatious litigant. The following chronicles Tangwall's history of vexatious-litigant declarations and the facts leading up to his present dispute with the Wackers.

         In 1988, Tangwall was one of numerous defendants the First State Bank of Princeton sued in Illinois. First State Bank of Princeton v. Lejfelman, 521 N.E.2d 195, 196 (111. App. 2d Dist. 1988). Two defendants in the case had pledged 440 acres of farm land to secure a debt owed to the Bank in the amount of $400, 000. The property was subsequently transferred to the "Lazy 'L' Family Preservation Trust" with Tangwall as trustee. After the Bank filed to foreclose on the property, Tangwall and the other defendants responded "by filing numerous, sometimes unusual, pleadings in the trial court." Id. at 364. The trial court entered a judgment for foreclosure, Tangwall and the other defendants appealed, and the appellate court affirmed. Id. at 367. Two other cases listed above-Tangwall v. First State Bank of Princeton and Lazy X' Fam. Preservation Tr. v. First State Bank of Princeton- arose from Tangwall's same attempt to convey property to a family trust to avoid a foreclosure.

         Soon after this litigation transpired, Tangwall became involved in a bankruptcy case which was referred to a U.S. District Court in Michigan in 1991. Borockv. Dalby, No. 91-CV-76364 (E.D. Mich. Jan. 6, 1992). Like some of Tangwall's cases before, this one also concerned "collateral attacks" on "orders confirming title to ... parcels of real property ...." Id. at 4. Tangwall and the other parties had filed numerous lawsuits pertaining to real property of a debtor's estate the court had awarded to a trustee. Because of the automatic stay, "each cause of action filed [was] a direct violation of the stay provision." Id. Due to the vexatious nature of the filings, the court permanently enjoined Tangwall and the other parties from filing additional suits related to the bankruptcy action. In what would portend Tangwall's considerable future of court-ordered sanctions, the court further enjoined him and the other parties from making any additional filings in any action before the court "or any other [c]ourt as trustees of any and all family preservation trusts pro per." Id. at 5.

         Tangwall appealed the order. While the 6th Circuit remanded it for the district court to assess attorney fees, costs, and sanctions under Fed.R.Civ.P. 11, the Circuit affirmed it in all other aspects. In re Dolby, 976 F.2d 733 (6th Cir. 1992). The Circuit even found much of the appeal to be frivolous, stating for instance, "this court concludes that the technical procedural arguments raised by the appellants lack merit, particularly in light of their history of raising these same arguments in all litigation in which they are involved." In re Dalby, 976 F.2d 733 (6th Cir. 1992).

         While Tangwall busied himself with several more lawsuits in various jurisdictions over the next fifteen years, at some point, he turned his attention to Montana. By May 2011, Judge David Cybulski of the Montana Fourteenth Judicial District Court, Musselshell County, noted ten separate civil lawsuits then-pending or recently resolved in state district courts that Tangwall was a party to. Tangwall v. Edwards, No. DV-11-08, Fourteenth Judicial District, Musselshell County, Order Declaring Don Tangwall a Vexatious Litigant (May 11, 2011). Judge Cybulsi noted Tangwall's frequent failures to attend hearings or respond to motions and how courts consistently granted default and summary judgments against him. (Id. at 2-3.) Courts dismissed still other cases as wholly meritless: in Tangwall v. Gunderson, No. DV-08-46, Fourteenth Judicical District Court, Tangwall sued for defamation but failed to establish the basic elements of the claim, and his "so-called response briefs ... [did] not in fact respond to the arguments and authority cited by Defendants"; in Tangwall v. Wacker, No. DV-07-93, Fourteenth Judicial District Court, Tangwall attempted to represent a No. of corporate entities as an unlicensed attorney, and the court noted the difficulty of "understanding his incomplete and unsupported briefs"; in Tangwall v. Edwards, No. DV-11-08, Fourteenth Judicial District, Tangwall asked the court to enjoin the City of Roundup from collecting taxes based on a "wholly frivolous" (and astonishing) allegation that Roundup was not properly incorporated and the fact that Tangwall had registered the assumed business name, "City of Roundup." (Id. at 3-4.) Judge Cybulski further noted eleven "extraordinary writs in the Montana Supreme Court" Tangwall had filed over the course of two months in 2011 alone. (Id. at 4-5.)

         After adopting the vexatious litigation standards from Molski v. Evergreen Dynasty Corp., 500 F.3d 1047 (9th Cir. 2007), Judge Cybulski found:

Mr. Tangwall's litigation history, as detailed above, demonstrates his twenty-year history of filing frivolous and patently meritless lawsuits, and demonstrates that he has no intention of refraining from such practices without intervention of the Court.
Mr. Tangwall's history in other jurisdictions ... demonstrates that he has a long and storied history of vexatious ligation practice and procedure. He has been notified on numerous occasions that he is not allowed to represent corporate entities or other parties, but he continues to do so. Courts lament his lack of clarity, or his filings' lack of any basis in law or fact, or his bad faith, and yet such actions continue. In all practicality, the only way to rein in Mr. Tangwall's vexatious litigation is to require that he submit all proposed filings to the Court for approval, and thereby wasting large amounts of the Court's time-time that would be better served on real cases.

Tangwall v. Edwards, No. DV-11-08, Fourteenth Judicial District, Musselshell County, Order Declaring Don Tangwall a Vexatious Litigant at 13-14 (May 11, 2011). And thus, Judge Cybulsi declared Tangwall a vexatious litigant. (Id. at 15-16.)

         During this same period, Tangwall filed two lawsuits in this Court regarding his state court proceedings-each was entirely frivolous. In Tangwall v. Spaulding, 1.11-CV-39-RFC, Tangwall sued Montana State District Court Judges Randal Spaulding, William Swandal, and David Cybulski, along with Chief Justice Mike McGrath of the Montana Supreme Court. He alleged the defendants failed to be impartial or had conflicts of interest. He failed to respond to the defendants' specific arguments other than to declare the defendants "imposters" who failed to abide by the law they swore to uphold. Tangwall v. Spaulding, 1:11-CV-39-RFC, Order and Findings and Recommendation of United States Magistrate Judge at 5 (June 23, 2011). The Court dismissed his complaint with prejudice. Tangwall v. Spaulding, 1:11-CV-39-RFC, Order Adopting Findings and Recommendation of United States Magistrate Judge at 5 (July 19, 2011).

         In DeMaio v. Weitzeil, 1:11 -CV-56-RFC, a state district court refused to allow Tangwall to act as an attorney on behalf of DeMaio, who had been arrested on criminal charges. Tangwall and DeMaio filed suit in this Court, alleging among other things, the state court wrongfully denied Tangwall his "rights to represent" DeMaio. DeMaio v. Weitzeil, 1:11-CV-56-RFC, Findings and Recommendation of United States Magistrate Judge at 1-5 (July 7, 2011). After all the defendants filed motions to dismiss or motions for summary judgment, Tangwall and DeMaio failed to respond and did "nothing to pursue their action." DeMaio v. Weitzeil, 1:11-CV-56-RFC, Order Adopting Findings and Recommendations of U.S. Magistrate Judge at 2 (Sep. 16, 2011). This Court stated, "Their failure to do so imposes a strain on judicial resources and, more significantly, works unfair prejudice upon Defendants compelled to appear to defend themselves." Id. And so, the Court summarily dismissed Tangwall and DeMaio's complaint. Id. at 3.

         Rather than learn from his mistakes, Tangwall continued his pattern of vexatious litigation, which turns the Court at last to the present case. The Court takes the following facts from the Wackers' statement of undisputed facts (Doc. 8-2), which Tangwall has not disputed.

         In 2007, Tangwall filed a complaint against the Wackers in the Montana Fourteenth Judicial District Court, Musselshell County, demanding damages of $850, 000 over a dispute involving a trucking enterprise and title to a $14, 000 cattle trailer (the same action above that Judge Cybulski later found to be wholly frivolous). (Doc. 8-2 at ¶ 1.) The Wackers counterclaimed and filed a third-party complaint against Tangwall, his wife Barbara Newland-Tangwall (Newland-Tangwall), his mother-in-law Margaret "Toni" Bertran (Bertran), and nine other entities believed to be Tangwall's alter-egos, including the Trust. (Id. at ¶ 2.) The Wackers obtained a judgment for nearly $140, 000 against Tangwall and a judgment for title to a semi trailer. (Id. at ¶¶ 5-6.)

         While that litigation was pending, Newland-Tangwall and Bertran conveyed certain real property to the Trust. (Id. at ¶¶ 8-9.) The Wackers consequently filed a complaint in the state district court alleging fraudulent transfer and naming Newland-Tangwall, Bertran, and the Trust as defendants. (Id. at ¶ 8.) The district court entered a judgment of default against the Trust in December 2011 and judgment against Newland-Tangwall and Bertran in May 2012, setting aside the fraudulent transfer of the real property to the Trust. (Id. at ¶¶ 21-27.) Through a sheriffs sale, the Wackers purchased Newland-Tangwall's one-half interest in the real property for $50, 000 of their judgment. (Id. at ΒΆΒΆ ...

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