Commercial Litigation and Arbitration

Sanctions — An Argument May be Frivolous Even If It Concerns a Matter of First Impression

From John Richards Homes Building Co. 2009 U.S. Dist. LEXIS 117913 (E.D. Mich. Dec. 17, 2009):

It simply cannot be the case that a party who raises an issue of first impression in a jurisdiction is entitled to absolute immunity from sanctions in raising the issue. Such a rule would require that a patently frivolous, yet novel, legal argument would not be sanctionable. Rule 11 allows for sanctions when the legal contentions are warranted only by a frivolous argument for the extension of existing law or for establishing new law. Frivolity is the lynchpin for awarding sanctions for an argument for extending the law or establishing new law. An argument may be frivolous even when it deals with an issue of first impression. See, e.g., Ozee v. Amer. Council on Gift Annuities, Inc., 143 F.3d 937, 941 (5th Cir. 1998) (rejecting as unpersuasive defendant's contention that it should not be sanctioned for pursuing an appeal in a case of first impression). Therefore, the Adell Companies' argument that JRH should be sanctioned for its argument regarding Mich. Comp. Laws § 600.4051 was not frivolous and does not warrant sanctions.

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