Commercial Litigation and Arbitration

Sanctions for Procedural Misconduct in the Course of a Federal Action Is Governed by Federal Sanctions Law — Failure to Abide by Safe Harbor Precludes Rule 11 Sanctions

Oliva v. Nat’l City Mortgage Co., 2012 U.S. App. LEXIS 16129 (9th Cir. Aug 3, 2012):

The district court did not abuse its discretion by declining to award defendants attorney's fees. Defendants were not entitled to attorney's fees under Nev. Rev. Stat. §§ 7.085 and 18.010 because plaintiffs' alleged misconduct was procedural in nature and, thus, is governed by federal law. See Galam v. Carmel (In re Larry's Apt., L.L.C.), 249 F.3d 832, 838 (9th Cir. 2001) ("federal courts must be in control of their own proceedings and of the parties before them, and it is almost apodictic that federal sanction law is the body of law to be considered in that regard"). Insofar as defendants sought attorney's fees under Fed. R. Civ. P. 11, they failed to comply with the safe harbor provision. See Barber v. Miller, 146 F.3d 707, 711 (9th Cir. 1998) ("[A] party cannot wait until after summary judgment to move for sanctions under Rule 11."). Defendants were also not entitled to attorney's fees under Nev. R. Civ. P. 68 and Nev. Rev. Stat. § 17.115 because plaintiffs reasonably declined defendants' settlement offer. See Uniroyal Goodrich Tire Co. v. Mercer, 890 P.2d 785, 789 (Nev. 1995) (listing factors for awarding attorney's fees under Nev. R. Civ. P. 68 and Nev. Rev. Stat. § 17.115), superseded by statute on other grounds as recognized in RTTC Commc'n, LLC v. The Saratoga Flier, Inc., 110 P.3d 24, 29 (Nev. 2005).

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