Summary
holding moving party should seek costs at the time of remand
Summary of this case from V. Suarez & Co., Inc. v. Bacardi Int'l Ltd.Opinion
Trustees brought action to resolve dispute as to administration of trust and decedent's estate. On trustees' motion for sanctions based on filing of improper removal notice, the District Court, Wolin, J., held that pro se party's removal notice was frivolous, warranting Rule 11 sanctions.
Motion granted.
Judgment affirmed, 898 F.2d 839.
Michael R. Griffinger, Crummy, Del Deo, Dolan, Griffinger & Vecchione, Newark, N.J., for beneficiaries.
N. Patrick Quirk, Quirk & Gallagher, Cresskill, N.J., for trustees.
Martin T. Durkin, Durkin & Boggia, Ridgefield Park, N.J., Guardian ad litem, for Jorge Unanue.
David M. Satz, Jr., Saiber, Schlesinger, Satz & Goldstein, Newark, N.J., for Goya Foods, Inc.
Antonio Hernandez Rodriguez, William Vidal Carvajal, Nicolas Nogueras, Hato Rey, P.R., for Charles Unanue.
Charles Unanue, San Juan, P.R., pro se.
OPINION
WOLIN, District Judge.
Counsel for the Trustees, Beneficiaries, Goya Foods, Inc., and the guardian ad litem for Jorge Unanue (the " Moving Parties" ) have jointly moved before this Court for the imposition of sanctions against Charles Unanue, pro se, and three of his attorneys in Puerto Rico under Fed.R.Civ.P. 11, 28 U.S.C. § 1447(c) and 28 U.S.C. § 1927. The moving parties have sought this relief for the improper filing of a Notice of Removal in this Court on July 10, 1989. The moving parties seek sanctions and costs, including their attorneys' fees, for the time and expense of defending a motion for remand of the purported removal and for the time and expense of bringing the instant motion for sanctions. After having reviewed the submissions of the parties and for the reasons set forth herein, defendants' motion for sanctions pursuant to Rule 11 is granted. Charles Unanue, pro se, will be ordered to pay attorney fees and expenses to the moving parties in the amount set forth below.
In addition to the moving papers, brief, and affidavits, the Court has received opposition papers from Nogueras, Hernandez & Vidal, Esqs. captioned " MOTION OF SPECIAL APPEARANCE IN OPPOSITION TO DEFENDANTS REQUESTS FOR SANCTIONS" which were filed out of time and has received a facsimile transmission of a letter from Charles Unanue, dated September 14, 1989, which has apparently never been filed with the Court. In the interest of justice, the Court has carefully considered the arguments presented in these opposition papers in the determination of the imposition of sanctions in this case.
I. BACKGROUND
In order to understand the necessity for sanctions in this case, an examination of the facts in the underlying superior court case and the procedural history of the action in this Court are required. The New Jersey state action which Charles Unanue sought to remove to this Court and to the Federal District Court in Puerto Rico was commenced on August 13, 1987 by Joseph and Frank Unanue (" the Trustees" ), the trustees of a New Jersey inter vivos trust created by their father, Prudencio Unanue, on November 16, 1970. Prudencio Unanue placed his principal asset, a significant block of shares in Goya Foods, Inc., a corporation closely held by members of the Unanue family, into the trust for the ultimate benefit of his grandchildren. At the same time he settled the trust, Prudencio Unanue also executed another document purporting to be his final will.
In 1972 and 1974 Charles Unanue allegedly signed documents in which the moving parties contend he renounced any interest in his father's estate and covenanted never to seek any of his father's assets or challenge his father's distribution of his assets. The moving parties contend that in exchange for these promises, Charles Unanue received cash consideration in the amount of $4.3 million.
After Prudencio Unanue's death in 1976 his final will was probated by the trustees, in their capacity as executors of the will. The estate administration and distribution was completed by 1981. In 1986, the Superior Court in New Jersey approved a First Accounting that had been filed by the trustees and contested by C. Jeffrey Unanue, one of Charles Unanue's sons. At that time, in accordance with the provisions of the trust, several of the beneficiaries received their shares of the trust.
In 1987 Charles Unanue challenged the actions of the trustees and executors and demanded a share of Prudencio Unanue's assets. As a result of these demands, the trustees filed the currently pending action in New Jersey Superior Court in order to resolve any dispute as to the administration of the trust and of the estate. After the trustees brought their action, Charles Unanue, through his attorneys in Puerto Rico, filed an action in the courts of Puerto Rico asking for the same relief as in his counterclaims in the New Jersey action. The Puerto Rico court stayed Charles Unanue's action in deference to the finding of the New Jersey superior court that it should exercise exclusive jurisdiction over the estate and trust assets. In 1988, Charles Unanue and his attorneys filed a second action in Puerto Rico. This action was stayed as well. Charles Unanue and his attorneys unsuccessfully sought review of the two stays in the Puerto Rico Supreme Court six times. The Puerto Rico Supreme Court denied two petitions for certiorari and four motions for reconsideration.
Back in New Jersey, Charles Unanue discharged his local attorneys two days before a scheduled status conference and hearing on the motion of Goya Foods, Inc. to intervene. The moving parties contend that this action was intended by Charles Unanue to further delay the New Jersey proceedings. This past June, Charles Unanue attempted to withdraw without prejudice a counterclaim filed on his behalf in the New Jersey proceeding which alleged a fraudulent conspiracy on the part of the trustees and others so that he would be free to reassert the claim in a future action which might be filed in " Puerto Rico, New York, New Jersey, Florida [or] any federal District Court." Charles Unanue's Motion to Withdraw Amended Counterclaim, ¶ 7, Certification of Michael R. Griffinger (" Griffinger Cert." ), Exhibit E. Judge Martin Kole of the Superior Court rejected this application stating that:
It is evident that Plaintiff is taking advantage, Plaintiff being Charles [Unanue], of the concurrence of jurisdictions to file a duality of proceedings regarding the same controversy. There is no question in my mind that every issue that is involved in this case is either addressed or should have been addressed in the amended counterclaim. And that what Charles [Unanue] is seeking is to fragment the litigation, contrary to our entire controversy rule.
Transcript of Recorded Proceedings, Judge's Decision, June 28, 1989, at page 2, lines 5-14, Griffinger Cert., Exhibit F. The Judge went on to express his skepticism of Charles Unanue's proffered reasons for seeking to withdraw the amended counterclaim, noting:
[E]ven if I were to give Charles [Unanue] the benefit of the doubt that ... he did not know ... [his attorneys] were filing amended counterclaims, which frankly I find difficult to believe, ... at some point this litigation has to come to an end, and it cannot go on for the next half century or next quarter-century, merely because on the eve of the determination of an important issue in the case, namely domicile, Charles [Unanue] wants to reserve certain rights which have to-should be determined in the present litigation or whatever litigation eventuates therefrom.
Id. at page 3, lines 6-19.
On Friday afternoon, July 7, 1989, Charles Unanue through his attorneys Hernandez, Vidal and Nogueras attempted to remove the two actions stayed in the local courts of Puerto Rico and the New Jersey superior court action to the Federal District Court for the District of Puerto Rico by filing a " Petition of Removal." The moving parties were informed of this action by " telefax" approximately one hour later. See Griffinger Cert., Exhibit A. That Court promptly dismissed the purported removal petition by order dated July 10, 1989. Griffinger Cert., Exhibit B. The Court also denied a further motion for reconsideration. Griffinger Cert., Exhibit I.
On Monday morning, July 10, 1989, Charles Unanue brought a copy of the " Petition for Removal" which had been filed in the District Court of Puerto Rico and attempted to file it in this Court. The Clerk's office would not allow Charles Unanue to file the document because it had been signed by attorneys who did not practice before this Court. Thereupon, Charles Unanue took the " petition," retitled it as a " notice" of removal and signed his own name at the bottom. The Clerk then accepted this document for filing by Charles Unanue, as a pro se litigant. Griffinger Cert., Exhibit J. Thereafter, a notice of removal was filed in the superior court in Bergen County, effecting the removal pursuant to 28 U.S.C. § 1446(d). The trial, which was scheduled to commence that morning, was disrupted, with attorneys, parties and witnesses forced to wait several hours before the proceedings could be continued after this Court's subsequent remand.
Attorneys for the moving parties were on hand at this courthouse when Charles Unanue filed his removal petition, and immediately filed an Order to Show Cause why the removed action should not be summarily remanded to the superior court. The moving parties suspected that Charles Unanue would attempt to remove the New Jersey action to this Court after the previous Friday's attempt to remove the action to the District Court for Puerto Rico. This Court promptly heard the Order to Show Cause and summarily remanded the action to the superior court. The Court found that the petition for removal had not asserted " any grounds for this Court to possess subject matter jurisdiction over the Bergen County case." Transcript of July 10, 1989 (" Tr." ), page 4, lines 5-7. The Court held that " [p]laintiff's attempt to assert a Federal RICO claim as a basis for removal runs afoul of the well-pleaded complaint rule." Tr., page 4, lines 8-10. Also, the two actions in the Puerto Rican courts could not be removed because Charles Unanue was a plaintiff in those actions and the District of New Jersey was the wrong district to which those actions could be removed. See 28 U.S.C. § 1441(a) and § 1446(a). Lastly, Charles Unanue's notice of removal was untimely under any possible interpretation of § 1446(b). Tr., pages 3-4. Counsel for the moving parties represented to the Court that Charles Unanue had been personally served with all of the papers and informed of the Court's intention to hold a prompt hearing on the matter. Tr., page 5, lines 20-24. Charles Unanue represents to the Court, in his letter in opposition to this motion, that:
Although defendants' [moving parties'] counsel on July 10, 1989, gave me copies of papers which they said they were going to file and advised me that they were going to have a judge hear the matter, I was not able to remain at the United States District Court due to the fact that I [sic] was required to attend a trial which was commencing at the Bergen County Courthouse, Hackensack, New Jersey before the Honorable Martin T. Kole. Defendants' counsel was [sic] fully aware of my obligation to attend the aforementione [sic] trial and ofmy [sic] inability to remain at the Courthouse.
After a thorough review of the removal notice and the submissions of the moving parties, the Court summarily remanded the action back to the Superior Court in Bergen County. Orders dated July 10, 1989. The moving parties seek sanctions for having had to oppose the filing of a notice of removal that they contend was " totally meritless."
II. DISCUSSION
The moving parties seek the imposition of sanctions under Fed.R.Civ.P. 11 and of costs under 28 U.S.C. § 1447(c) and 28 U.S.C. § 1927 for the improper, vexatious and frivolous filing of a Notice of Removal in this Court on July 10, 1989. The moving parties seek this relief against Charles Unanue and three of his attorneys in Puerto Rico. The Court will make its determination as to whether sanctions will be imposed pursuant to an analysis under Rule 11. Section 1447(c) is inappropriate because the statute states only that the remand order of the Court may require the costs enumerated in the statute. The moving parties should have moved for costs under this provision at the time of remand. Section 1927 has been held to require a finding of bad faith. Gaiardo v. Ethyl Corp., 835 F.2d 479, 484 (3d Cir.1987), citing to Baker Indus. v. Cerberus Ltd., 764 F.2d 204, 208-09 (3d Cir.1985). The record before the Court on this motion is incomplete on the issue of the subjective intent of Charles Unanue and his three attorneys from Puerto Rico. Therefore, the Court will not address that issue here. Lastly, because the notice of removal was filed by Charles Unanue, pro se, and his three attorneys from Puerto Rico have not been admitted to the bar of this Court, the Court declines to consider the imposition of sanctions against the three attorneys. The District Court for the District of Puerto Rico would appear to be the appropriate forum for such a demand.
Section 1447(c) provides in part:
Section 1927 provides:
The desired goal of Rule 11 is accountability. Conduct must be viewed by an objective, reasonable standard as to whether it comports with the spirit of the Federal Rules of Civil Procedure. Snow Machines, Inc. v. Hedco, Inc., 838 F.2d 718, 727 (3d Cir.1988); Colburn v. Upper Darby Township, 838 F.2d 663, 667 (3d Cir.1988), cert. denied, 489 U.S. 1065, 109 S.Ct. 1338, 103 L.Ed.2d 808 (1989). Although reasonable minds may differ as to conduct that they perceive is violative, it is clear that the Third Circuit targets " abuse" and manifests a concern that sanctions not be imposed in a routine and indiscriminate manner. Mary Ann Pensiero, Inc. v. Lingle, 847 F.2d 90, 94-95, 99 (3d Cir.1988). The Court in Pensiero admonished that Rule 11 " sanctions ... are reserved for only exceptional circumstances." Id. at 99.
Rule 11 directs its force to pleadings, motions and other papers incident thereto.Rule 11 " imposes on counsel a duty to look before leaping and may be seen as a litigation version of the familiar railroad crossing admonition to ‘ stop, look, and listen.’ ... [It calls for a] reasonable investigation of the facts and a normally competent level of legal research to support the presentation." Pensiero, 847 F.2d at 94, quoting Lieb v. Topstone Industries, 788 F.2d 151, 157 (3d Cir.1986). Similarly, in Teamsters Local Union No. 430 v. Cement Express, Inc., 841 F.2d 66, 70 (3d Cir.1988), cert. denied sub nom. Herman Bros., Inc. v. Teamsters Local Union No. 430, 488 U.S. 848, 109 S.Ct. 128, 102 L.Ed.2d 101 (1988). Rule 11 sanctions were deemed appropriate only if the filing constituted abusive litigation or misuse of the court's process. From these authorities it is clear that Rule 11 was designed to discourage litigants from pursuing the very sort of conduct that we have in this case, a frivolous, factually insufficient and legally insupportable attempt to remove a state court probate proceeding to federal court. Since Rule 11 targets " abuse ... the Rule must not be used as an automatic penalty against an attorney or a party advocating the losing side of a dispute." Gaiardo, 835 F.2d at 482. Otherwise the existence of Rule 11 and its frequent application might have a chilling effect on many possibly meritorious claims. However, the application of sanctions in this case is warranted because the extensive and serious deficiencies in Charles Unanue's Notice of Removal rise to the level of wasting the moving parties', and the Court's, resources.
Fed.R.Civ.P. 11 provides in part:
As discussed above, Charles Unanue's Notice of Removal failed to allege any grounds for the proper removal of the New Jersey superior court action to this Court. The Notice was filed out of time; and no good faith extension of the law would possibly permit its timely filing. Charles Unanue failed to invoke any legal basis for the removal of any of the three " state" actions to either of the federal courts to which he attempted removal. No good faith extension of the law can alter the basic and uncontroverted requirements of removal jurisdiction. Charles Unanue attempted to remove the two Puerto Rican actions to the District of Puerto Rico, even though he was a plaintiff in both of those actions. He also attempted to remove the New Jersey action to the District of Puerto Rico and, although that matter is not before the Court on this motion, it does illustrate the contemptuous manner in which Charles Unanue and his attorneys have treated the removal statutes. As this Court held on July 10, 1989, the Notice of Removal failed to invoke any grounds for jurisdiction in this Court. There were no allegations of diversity jurisdiction and no properly plead federal question jurisdiction. The attempt on the part of Charles Unanue to convert a state probate proceeding into a federal RICO action failed because the facts of his case would not support such a transformation.
The Court can only infer from the inadequacy of the pleadings that either Charles Unanue and his attorneys did not perform a reasonable investigation of the facts and a normally competent level of legal research or they were motivated by the intention to deliberately delay and harass their opponents in the New Jersey litigation. In either event, the Court can, and will, hold Charles Unanue accountable for the time, effort and expense that his adversaries were forced to expend opposing his factually and legally insupportable removal attempt. Although the Court heard the matter as quickly as it could, the trial which had been scheduled to begin the morning of July 10th was delayed while attorneys, parties, and witnesses awaited the remand order. The moving parties spent the weekend before Charles Unanue filed the removal notice in New Jersey researching the law and preparing the papers for the Order to Show Cause why the action should not be remanded immediately to the state court. They took this action after having been informed of the attempted removal of the New Jersey action to the District Court for the District of Puerto Rico. It was only this timely action on the part of the moving parties which mitigated the expenses which the frivolous removal notice caused. In light of the previous discussion, the Court holds that Charles Unanue must be sanctioned under Fed.R.Civ.P. 11 for his conduct in filing, pro se, such a meritless Notice of Removal with this Court. The fact of Charles Unanue's status as a pro se litigant is irrelevant to this determination. See, Gagliardi v. McWilliams, 834 F.2d 81 (3d Cir.1987) (imposition of Rule 11 sanction on pro se plaintiff requires prior notice and opportunity to respond; Clark v. Green, 814 F.2d 221 (5th Cir.1987) (imposition of sanctions warranted notwithstanding that appellant appeared pro se ).
Attorney's fees, when awarded as Rule 11 sanctions, ordinarily include only compensation for expenses generated by the Rule violation itself. See Pensiero, 847 F.2d at 99. In this action, attorneys for the moving parties have submitted affidavits for the added expense of having to oppose this frivolous removal notice and for the expense of bringing the instant motion for sanctions. The Court has reviewed the affidavits of Michael R. Griffinger, Esq., of Crummy, Del Deo, Dolan, Griffinger & Vecchione, attorneys for the beneficiaries of Prudencio Unanue's will and trust; Martin T. Durkin, Esq., of Durkin & Boggia, guardian ad litem and attorney for Jorge Unanue; N. Patrick Quirk, Esq., of Quirk & Gallagher, attorneys for defendants; and David M. Satz, Jr., Esq., of Saiber, Schlesinger, Satz & Goldstein, attorneys for Goya Foods, Inc. Charles Unanue argues in his opposition letter that the amount the attorneys have requested is excessive in light of the brevity of their opposing papers and the limited amount of time spent in Court on this matter. However, Charles Unanue has not put forward any basis for his conclusion that the brief period of time which was spent by the moving parties in order to prepare for the Order to Show Cause was unreasonable. In fact, it was the conduct of Charles Unanue and his attorneys which forced the moving parties to spend the weekend preparing for the July 10 removal notice. The Court finds no reason to sua sponte exercise its discretion and reduce the amount of attorney fees which the moving parties have requested in their affidavits for the expense of opposing the removal notice. However, as the Third Circuit stated in Pensiero, the general rule is that attorney fees which are awarded for a violation of Rule 11 include compensation for the expense generated by the Rule violation. Therefore, the Court declines to award the moving parties attorney fees for the expense of bringing the instant motion for sanctions.
Charles Unanue, personally, will be ordered to pay a total of $16,011.15 in attorney fees as a sanction for having violated Fed.R.Civ.P. 11, to be distributed in the following manner and amounts: Crummy, Del Deo, Dolan, Griffinger & Vecchione will receive $12,261.15; Durkin & Boggia will receive $750.00; Quirk & Gallagher will receive $1640.00; Saiber, Schlesinger, Satz & Goldstein will receive $1360.00. These amounts represent the expenses incurred by these law firms in having to oppose the frivolously interposed Notice of Removal. Charles Unanue must pay these amounts within ten (10) days from the filing of the accompanying order. The Court has arrived at the decision to impose sanctions in these amounts after considering the nature of the deficiencies, the reasonableness of the proposed fee awards, the moving parties' obligation to mitigate their damages, the relative amount of work produced by the attorneys for the various parties and the deterrent purpose of Rule 11 sanctions.
III. CONCLUSION
For the reasons stated above, the moving parties' motion for sanctions under Rule 11 will be granted and Charles Unanue will be ordered to pay the amounts described above as sanction for his violation of the Rule.
If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.
Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.
Every pleading, motion, and other paper ... shall be signed.... The signature of an attorney or party constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer's knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.