Rule 11 Sanctions — Safe Harbor Must Be Honored Only Once Per Motion — If Denied without Prejudice, Motion May Be Renewed without Additional Safe Harbor — Needn’t Be 100% Identical 2d Time But Must Be Essentially the Same Motion (Case Law Split)
Merritt v. Lake Jovita Homeowners Ass’n, Inc., 2010 WL 11507746 (M.D. Fla. May 11, 2010):
*1 BEFORE THE COURT is Defendants Lyons Heritage Pasco, LLC, Lyons Land Pasco, LLC, Bobby Lyons, and Morris Needles’ (the “Lyons Defendants”) Motion for Relief from Order Denying Their Motion to Tax Attorneys’ Fees and Reconsideration of Their Motion to Tax Attorneys’ Fees (Dkt. 61), to which Plaintiff Richard Merritt has responded (Dkt. 65). As set forth below, the motion is GRANTED.
Although concluding that Plaintiff Richard Merritt’s conduct violated Rule 11, the Court’s September 28, 2009 order (Dkt. 60) denied the Lyons Defendants’ Motion to Tax Attorneys’ Fees for failure to comply with Rule 11’s safe harbor provision.1 Rule 11 requires the party seeking sanctions to serve a proposed Rule 11 motion on the opposing party and allows the motion to be filed only if the challenged pleading is not withdrawn or corrected within twenty-one days after service. Fed. R. Civ. P. 11 (c)(2); see also Brickwood Contractors, Inc. v. Datanet Eng’g. Inc., 369 F.3d 385. 388-89, 396 (4th Cir. 2004)(en banc); Macort v. Prem, Inc., 208 F. Appx. 781, 786(11th Cir. 2006).
If a properly served and filed motion for Rule 11 sanctions is denied without prejudice to later renewal, the motion may be renewed without providing a second safe harbor period. See Holgate v. Baldwin, 425 F.3d 671. 678 (9th Cir. 2005).2 Additionally, some courts have rejected a “hypertechnical” reading of Rule 11(e)(2) that would require that the motion ultimately filed following the safe-harbor period be identical in all respects with the motion previously served.
For instance, in Ideal Instruments, Inc. v. Rivard Instruments, Inc., 243 F.R.D. 322 (N.D. Iowa 2007), the district court noted that “the purpose of requiring service of a ‘warning shot’ motion more than 21 days before filing of a Rule 11 motion” is to afford the opposing party the opportunity to withdraw an allegedly frivolous pleading. 243 F.R.D. at 339 (citing Gordon v. Unifund CCR Partners, 345 F.3d 1028, 1030 (8th Cir. 2003)). The court concluded that this purpose was accomplished and the safe harbor provision satisfied by service of a draft Rule 11 motion not identical to the motion ultimately filed where (a) although including a brief with supplemental argument not contained in the draft, the grounds asserted in the motion ultimately filed were the same as or more narrow than the grounds asserted in the draft and (b) the relief sought in the motion was more narrow than that sought in the draft. Id. at 337-40. But cf. Robinson v. Alutiq-Mele, LLC, 643 F. Supp. 2d 1342, 1350-51 (S.D. Fla. 2009) (“By its plain language, Rule 11 requires a movant to file and serve the same sanctions motion.”) (emphasis in original).
*2 The Lyons Defendants served their Rule 11 Motion for Sanctions (the “first sanctions motion” [Dkt. 17 & 39 at 4] ) on February 8, 2008, i.e., twenty-six days before it was filed. On August 29, 2008, the Court dismissed Plaintiffs’ Amended Complaint, denied the first sanctions motion without prejudice, and warned that, if Plaintiffs re-pleaded a similarly deficient RICO claim, the Court would entertain renewed motions for sanctions. (Dkt. 38 at 9). On April 7, 2009, the Court dismissed the Second Amended Complaint and informed the parties that the Court would entertain appropriate motions for sanctions. (Dkt. 51 at 10-11). The Lyons Defendants simultaneously served and filed their Motion to Tax Attorneys’ Fees (the “second sanctions motion”) on April 20, 2009. (Dkt. 53 at 7).
Essentially, the Lyons Defendants argue that, although simultaneously served and filed following dismissal of Plaintiffs’ Second Amended Complaint, the second sanctions motion effectively complied with Rule 11’s procedural requirements because (1) the second sanctions motion sought sanctions on grounds identical to those argued in the first sanctions motion and (2) the Court’s August 29, 2009 order denied the first sanctions motion without prejudice and expressly warned Plaintiffs that the motion would be “reconsidered” if they persisted in re-pleading their frivolous RICO claim.
In response, Plaintiff notes that the first sanctions motion was denied (albeit without prejudice) and argues that the second sanctions motion asserts a ground for sanctions (the filing of the Second Amended Complaint) not asserted in the first sanctions motion. See Fed. R. Civ. P. 11(c)(2) (“A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b).”); Zhu v. Federal Horn, Fin. Bd., No. 04-2539-KHV, 2007 WL 675646, *4 (D. Kan. Mar. 1, 2007) (denying renewed motion for Rule 11 sanctions based partly on “additional conduct” because renewed motion failed to comply with safe harbor provision); Saldibar v. Delray One, Inc., No. 07-80608-CIV, 2008 WL 3540518, at *2 (S.D. Fla. Aug. 12, 2008) (“The safe harbor provision still applies even though the instant motion is a ‘renewed’ motion.”). Additionally, Plaintiff asserts that he relied to his detriment on the Lyons Defendants’ failure to serve the second sanctions motion prior to filing it because the failure “allowed the Plaintiffs to believe that the Lyons Defendants had determined that the claims as newly pleaded were no longer sanctionable,” (Dkt. 65 at 3).
Here, as in Holgate, the second sanctions motion effectively renewed the first sanctions motion, which complied with the safe harbor requirement. The only additional conduct alleged to be sanctionable in the second sanctions motion relates to Plaintiff’s reassertion of the frivolous RICO claim in the Second Amended Complaint. Plaintiff’s reassertion of the frivolous RICO claim demonstrated Plaintiff’s persistence in the conduct complained of in the first sanctions motion and further confirmed Plaintiff’s failure to conduct the required pre-filing investigation of that frivolous claim. The inclusion of this additional argument in support of sanctions did not require a new safe harbor period because the relief sought and the grounds asserted in the second sanctions motion are essentially identical to those asserted in the first sanctions motion. See Ideal Instruments, 243 F.R.D. at 338-39.
Finally. Plaintiff’s assertion that he relied to his detriment on the Lyons Defendants’ failure to serve the second motion for sanctions before filing it does not support a different result. That assertion is not explained or supported by affidavit. Moreover, Plaintiff ignores the express warning in the Court’s August 29, 2008 order that it would entertain renewed motions for sanctions if Plaintiffs pursued their frivolous RICO claim (Dkt. 38 at 9).
*3 For these reasons, Defendants Lyons Heritage Pasco, LLC, Lyons Land Pasco, LLC, Bobby Lyons, and Morris Needles’ Motion for Relief from Order Denying Their Motion to Tax Attorneys’ Fees and Reconsideration of Their Motion to Tax Attorneys’ Fees (Dkt. 61) is GRANTED as follows.
1) The September 28, 2009, order (Dkt. 60) is VACATED in part to the extent that the order denied Defendants Lyons Heritage Pasco, LLC, Lyons Land Pasco, LLC, Bobby Lyons, and Morris Needles’ Motion to Tax Attorneys’ Fees as to Plaintiff Richard Merritt.
2) Defendants Lyons Heritage Pasco, LLC, Lyons Land Pasco, LLC, Bobby Lyons, and Morris Needles’ Motion to Tax Attorneys’ Fees (Dkt. 53) is GRANTED in part. For the reasons stated in the September 28, 2009, order, the Court finds that (1) in violation of Rule 11(b), Plaintiff Richard Merritt asserted against the Lyons Defendants a frivolous RICO claim that reasonable investigation would have demonstrated had no chance of success and (2) effective deterrence requires an order directing payment of “part or all of the reasonable attorney’s fees and other expenses directly resulting from the violation.” Fed. R. Civ. P. 11(c)(4).
3) The parties shall confer in an effort to resolve the amount to be paid. If the parties fail to agree, the Lyons Defendants shall file a motion for approval of attorneys’ fees and expenses on or before May 21, 2010. The motion shall include supporting affidavits and shall demonstrate the reasonableness of attorneys’ fees requested. Plaintiff Richard Merritt may attach to his response affidavits demonstrating any pertinent limitation on his ability to pay. Both parties shall address the question whether effective deterrence requires an award of all of the Lyons Defendants’ reasonable attorney’s fees directly resulting from the violation. See Fed. R. Civ. P. 11(c)(4) (“A sanction imposed under this rule must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated.”).
The September 28, 2009 order granted in part, as to Plaintiff Richard Merritt, Defendants Lake Jovita Homeowners Association, Inc. and Lake Jovita Joint Venture’s motion for sanctions under Rule 11. However, the order determined that, under the more lenient standard applicable to the conduct of a non-lawyer proceeding pro se, Rule 11 sanctions against Plaintiff Mary Jo Merritt were not warranted. The Lyons Defendants do not seek reconsideration of this determination.
See also Divane v. Krull Elec. Co., Inc., 200 F.3d 1020, 1026-27 (7th Cir. 1999); 1-2 Sanctions: The Federal Law of Litigation Abuse § 17 (Matthew Bender & Co. 2009) (“If a Rule 11 motion is served and filed in accordance with Rule 11(c)(2) and the court denies the motion without prejudice to its being later renewed, the later renewal need not again afford a 21-day safe harbor.”) (citing Holgate, 425 F.3d at 678); 1 Court Awarded Attorney Fees ¶ 11.05 (Matthew Bender & Co. 2009) (“If a Rule 11 motion is initially filed after observance of the safe harbor period, but the court denies the motion as premature, the movant need not again give the adverse pa[r]ty the benefit of the safe harbor provision before renewing the motion.”) (citing Divane, 200 F.3d 1025-27).
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